Filing tax return as day trader

Discussion in 'Taxes and Accounting' started by remarble, Apr 9, 2006.

  1. remarble


    Is it necessary to list every one of perhaps a thousand or more different stock transactions in a schedule D, 1040, in order to file.

    Is there a better way. and is there quality software to accomodate this problem.

    Thanks all.....remarble
    You must enter the details of each transaction on a separate line. If you have more than five transactions to report on line 1 or line 8, report the additional transactions on Schedule D-1. Use as many Schedules D-1 as you need. Enter on Schedule D, lines 2 and 9, the combined totals from all your Schedules D-1.

    Q. Why was the paragraph revised?
    A. It was updated to remind investors that they must include ALL transaction information as required on Schedule D. Some filers were submitting copies of brokerage statements that did not include all the required transaction information, were attaching summaries, or were writing “details available upon request.”
  3. range


    Awesome link, traderstatus. Thanks.
  4. trader status you're a cpa who does traders retunrs just like green and have a vested interest to do line by line. the statement from the irs says quote on quote nothing has changed they're just reminding"taxpayers". in my opinion they're trying to weed out "investors" who are trading part time and writing off there expenses on sch c. i assure you a trader doing 100's of million's of $ of trade's a year with no other income who's been filing as a mtm trader for years will not be touched. the irs has no itnerest in seeing a 2000 page d-1 period.
  5. Pabst


    Completely accurate.
  6. For those who might have difficulty clicking the link to the official IRS web site, here's another snipit from there:

    Q. What are the reporting rules for traders?
    A. On page D-3 of the 2005 Schedule D Instructions, under “Traders in Securities” it states: “Like an investor, a trader must report each sale of securities (taking into account commissions and any other costs of acquiring or disposing of securities) on Schedule D or D-1 or on an attached statement containing all the same information for each sale in a similar format.”

    Q. Can investors use an attached statement like traders?
    A. Yes. Investors may submit attachments in lieu of completing lines 1 and 8 on Schedule D or D-1 as long as the attachments contain all the required information and are in a similar format. This means investors may follow the same format required of traders.

    That said, yes I guess it could be said that I have a more vested interest in getting this onerous requirement repealed than most other people. If you followed my reporting, you'd know that I was the first outside tax practitioner to find and go directly the the actual author of the new Sch D instructions in December 2005 to discuss this issue in detail. Then the AICPA went straight to the IRS commissioner and had the "face saving" retraction as shown in the link I provided earlier.
  7. I am very happy that I switched to futures six years ago.

    1. Still allowed summary reporting of trades on Form 6781;
    2. No wash sale rule; and
    3. 40%/60% short/long term capital gain rates.

  8. Absolutely, odd how they have such extremes in reporting. Keep in mind though that the 60/40 rule has the potential of being eliminated to cover the whims of Congress' spending habits. This tax bene was nearly repealed 1 or two years ago.
  9. trader satus so you honestly think the irs will audit a 5 year mtm traders who's consitently done 1 billion a year of 1099 sales and has no other income?the answer is a resonding no. i've talked to many trader accountants in the past few years and all said there audit rates are miniscule to almost zero outside outrageous nol loses are a sudden mtm election with big loses. the irs knows 95% of small businesses lie like crap but they audit maybe 1%. and all traders info is sent to the irs were a small business is dealing with cash and many other things
    #10     Apr 9, 2006