Don, TriPacks quote comes directly from the IRS website - I read it myself. It seems to state very clearly that a person in the business of trading his or her own account is not liable for SE tax on the earnings. This is an area of concern to me. Why do you say that Tri Pack was wrong? PS I just re-read your post and I see that you are talking about prop traders. Does anyone else have a different take on SE tax and trading profits?
It seems to me that trading income is not considered ordinary income, therefore not subject to self-employment taxes.
Do traders have to pay estimated quarterly taxes or is it a choice if you want to? Also, do you only pay the penalty if you get audited?
that is correct. ther are a few ways to eacape penalty but the bar of proof is high and traders wouldnt qualify.
to the IRS I read about. Traders say you have to list each stock bought/sold through out the year, NOT using the 1099 your broker sends. I have been simply sending the 70 or so pages sent to me by my broker (1099) with my year end 1040 since 1998. The IRS has never told me not to. Why do so many traders have to manually list all their trades every year?