BOTTOM LINE: Get a CPA and take anything you read on this site with a grain of salt. You do not need an LLC or Trader Status to deduct certain expenses, but talk to your CPA.
If you do find yourself caught in the passive income net as a limited partner simply cite 1.469-1T(E)(6).
Under some business entities you would have to pay FICA and Medicare tax. On the good side, you can put some IRA money away.
You can invest through your IRA in your LP but there are special circumstances that are too long to discuss here but suffice it to say, you have to be careful about what types of funds you commingle to avoid having to report to ERISA and you can't serve as both custodian and manager. It would actually be easier for the OP's spouse (assuming married) to invest through her (assuming OP is male) IRA than his own to avoid that conflict of interest.
Check out Bob Green's site, he's is THE authority on this stuff. He's not cheap though, although you get what you pay for. Edit: Forgot the link: http://www.greencompany.com
This is a pretty good article regarding mark-to-market election, where you don't pay self-employment, not limited to the additional $3000 capital gain loss, get to write off a bunch of expenses, overall easier for form filing IMO. The only problem with this is that you will not have the tax friendly 60/40 rule pertinent to the futures you trade. Anyway, hope this helps http://www.thestreet.com/story/716334/how-to-file-a-return-that-tells-the-irs-youre-a-trader.html
I'm seriously skeptical about people saying that you can't make trading into a career, why the hell do we have stories being written about people who have made millions then? It's exactly the same argument with the whole internet guru crap except the opposite, if they're making so much money why do they need it? Except in this case it's, if they're making so much money then why the hell can't you make a career out of it? Sure if you lose a lot then you probably will need a job to backup your losses and keep you going but if you can actually trade and make profits the majority of the time then there's nothing stopping you from making it into a career in my opinion. I think if your not able to make 10k to 15k though you might want to change your trading methods. I don't want to come across as an ass because I'm still learning but you can't be making much money if you are worrying about that much money or alternatively it could be that your method is actually too expensive and you should try something else.
From my vantage point many traders are making errors that are costing them thousands of dollars each year, couple that with the 5 critical mistakes that most traders make and you wonder how anyone is successful in this business. However, August is generally the month where trading volumes decrease from the previous month and this year they were actually up 14%, so it sez something. Jim Crimmins