Those jobbers u talk to when u call 1-800-irs or whatever are completely clueless when it comes to the tax code. Talk to a CPA or tax attorney, my guess is capital gains need to be reported regardless of trading vehicle.
You guys are missing my point. I know it's illegal, I know I should report. I know I probablly will for fear of tax evasion. But how is the IRS going to find out about it. They have no record of it!!! Even if I get audited there's no record, there's no 1099. The big question is why does the IRS do it?? All they have to do is make you put it on a 1099.
FWIW, I know a top broker (private client group) for a MAJOR house. I don't want to use the name. He has told me time and time again that his firm NEVER reports option income. He said it was a waste of time ---because so few of their clients make money trading them over the course of the year. They do not bother reporting option profits to the IRS. He found this out after he going over year end statements his first few years and realizing that his and his clients options profits were NOT included in the IRS reporting. I would report it. It is not worth it if you get caught. But I just thought that I would chime in.
my only guess is IRS know there only a handful of people making money on option that it is not worth the hassle to keep track or go after the lucky one who makes money. ps. the post above confirm my theory. pss. just imagine a IRS worker reaction when he sees you pay option tax.
Basically it is like my wife's profession. She is an independant massage therapist. The IRS has no way of knowing how much she makes, but we still report it. IF we didn't and they came to audit, guess how gets stuck paying back taxes on the income. Besides that, I get really annoyed with people that evade taxes.
But your missing the point all they have to do is make you list it on a 1099. THEY DON'T!! WHY?? Like I said when I called the IRS they said it's a tax loophole. I don't know I guess I'll have to talk it over with my account
I'm assuming your wife is paid through cash there's no record of it. That's a different story. There is a record of options trading and the IRS could easily make you report, but they don't
lasner i've been a full time trader 16 years. you're right why does the irs not get a copy of options? i suspect it's becasue 95% of people lose in them so why get a copy. it make no sense. you ask how can the irs find out? easy as looking at your balances on 12 monthly statments. if they see your balance went up from jan 1st to dec 31st and it looks alot different than your capital gains reported they'll dig in further. but you're right till your audited it's up to you to report no different than the milliosn ina cash business. but the irs has icnreased audits big time and if you're the unlucky one who gets caught they'll go threw many back years to get you and make your life miserable. ask yourself do you feel lucky
Liar You have said the same thing like 5 times about your calling them and them telling you it is a loophole..You are full of shit as you: #1 Never Called Them #2 NO ONE from the IRS would ever tell anyone it is a "LoopHole" Now to the truth...you are trying to get people here to tell you how the IRS will find out about you and your tax evading by your not reporting your option gains...you want people here to tell you everything will be fine by your not reporting it but I have news for you... Watch for your audit notice in the future. Liar!