HLV and taxes

Discussion in 'Prop Firms' started by malona, Feb 14, 2006.

  1. malona


    This is not intended to bad mouth HLV trading but more of a question. I have traded there before and they wouldn't give me a 1099 because i was not profitable last year. So first thing that came to my mind is im going to take a capital loss. Guess what? HLV said they only give 1099 to those who are net profit. So this means my capital losses belongs to them and they will take the benefit of tax write off. The problem with this is if im profitable i pay the tax and if your not profitable they take the loss and the tax benefit of trader capital loss??? I'm just wondering if this is legal? Here is some statement of the agreement... I admit signing this is one of the dumbest thing i have ever done in my life. Not trying to bad mouth them, hlv does have some advantages like cheap commission. But, im wondering if this is legal? Can someone please answer.

    Here's that one line in my trader agreeement:

    "You understand and agree that all right, title and interest in and to the Company Account, the Trader Sub-Account and the profit and loss thereon are and shall be the property of the Company, except to the extent that you are entitled hereunder to receive a percentage of the net trading profits as per schedule A, obligated hereunder to bear the Trader Losses, and entitled to receive, upon the termination of this agreement, that portion, if any, of the Deposit Balance not required to re-pay Losses. Therefore, you should understand that any losses on securities transactions in the Company Account, including in the Trader Sub-Account, belong to the Company, and not to you, and so are not available to you to offset any ordinary income or capital gains that you may earn during any tax year. "
  2. how much money did you put up? you can only claim a loss for your own money.
  3. malona


    thats my assumption, to claim loss of my own money but they said my loss is not an individual loss and i cant claim any.
  4. anybody familiar with HLVs West Palm Beach office?
  5. you signed a contract and pointed it out yourself and you are still asking about it?

  6. However the contract cannot break IRS law and standard GAAP accounting practices...Sounds like something to try in Tax Court. There are some college students that would love this case for free!

    The IRS has a list of them...

    Michael B.
  7. Is'nt the validity of a contract contingent on it not violating the law. It seems to me that a firm can't just take that loss as their own if the trader came in with let's say 10K and lost 8K for the year. He should be able to claim that 8k for his personal loss.

    Think about it.

    Firm A makes $1M for the year in commmissions from two groups of traders-winners and losers. Winners had 100 traders netting $1M whom they issue a 1099 to. The losing team lost 500K, I think it would be a violation of IRS laws to use the losing trader's 500K loss against their $1M gain.(not my idea but a fellow ET'er)

    Any lawyers/CPA's care to comment?
  8. My only comment: Pro/Prop firms can be a HUGE hassle.
    Rule #1: Never sign anything from a pro/prop firm until you fully understand the implications of each and every statement in the agreement. If you do not have the intelligence to do so, hire an attorney who is familiar with these types of agreements for a few $hundred. That move "save" you $thousands.
  9. LowRisk


    I'm not a lawyer or CPA, but one thing I know for sure is that no prop firm can claim your own losses if those losses came from your capital at the firm. K-1's, 10999's and all other tax documnets are only references for you and the IRS. You can still claim the loss even HLV wouldn't let you. I let you in on a seceret, they can't tell you how to file your tax returns. If you ever get audited, guess who's going to pay. Just make sure you keep all the records. This business is full of sleazy characters. HLV's rates aren't even good. If you make money and trade decent volume, I suggest you look elsewhere.
  10. Amen Brother !
    #10     Feb 22, 2006