Deducting Trading Expenses

Andy,

I suggest you take a look at this site http://www.greentradertax.com/section1256.htm in addition to the links I posted earlier in this thread.
Green have some guides on tax treatment for stock and futures traders. They are fairly priced and would be tax deductible.
In terms of deducting expenses, assuming you qualify as a trader you can deduct all the expenses that you had listed and more.

Stuart

 

Andy4,

If you are a profitable emini trader you DO NOT want to claim M to M. You lose the 60/40 gain tax split from futures.

 

Will check out the links, thanks.

Later, Andy

 

Andy, The info from Ib goes on form 6781. That's where you get the 60/40 split, then that info goes on sched d.

To deduct trading expenses, file sched c with job tiltle "full time trader" (You might want to include a few pages of your monthly statements to show them your trading style qualifies).

Do not show any profit or loss on sched c. Even though it looks strange. As a trader you are exempt from self employment taxes.

Then list on sched c in the spaces provided, or in the "other expenses" your expenses like software, isp, books, etc.

then on 1040 write the total expenses in as a sched c Business loss.

The forms can be downloaded from www.irs.gov

Just take some time and look over
1040
6781
Sched C
Sched D

 

It is confusing because mtm traders don't use sched d. And all 1256 contracts (which is what e mini are) are marked to market at year end. Most info out there is for stock traders, and for most stock traders mtm election is good. So you have to sift through it all because it is not always clear in the literature what everybody is talking about.

Trader tax status and mtm are often confused.

 

Thanks Profitseer, greatly appreciated

Andy

 

good explanations, you could be a tax adviser as second career. Andy, thing will start clear up if you fill out those form early.