How can a part-timer achieve trader status

Discussion in 'Taxes and Accounting' started by sempergumby, Mar 31, 2004.

  1. Hi,

    I'm make approximately 3-4 trades per day, every day, which would probably be enough to qualify as a trader, however, I have a full time job. According to the tax code, a "trader" can't have a seperate full-time job. Is there an entity that I can form to get around this? Maybe a C-corp perhaps?

    Any advice would be appreciated...

  2. You could certainly form a trading entity (for example, an s-corp) to better achieve trader status, but generally it is best to avoid a c-corp as the actual trading entity. While there are too many issues with c-corps as the sole trading entity, they may be useful in certain strategies using multiple entities.
  3. lindq


    If you are married, and your spouse is not working, have him/her file as the trader.
  4. The advice i got from a CPA a few years ago is that if you make significantly more money trading than W2/1099, then you can file trader status and get accepted. If your W2/1099 is larger than your trading income, then you're not likely to get your trader status approved.
  5. That sounds about right. My inability to achieve "trader status" as the IRS defines it b/c of my job/income was the reason I was mulling an entity.

    To the person that suggested an S-Corp- what's the advantage of this over a C-corp? And if I did the S-corp why would this better my chances of achieving trader status?

    Thanks in advance for your advice, BTW :)

  6. sempergumby, Actually I didn't suggest an s-corp, I used it as "an example" only. I discuss the answers to your questions at
  7. MR.NBBO


    You all must be out of your minds.

    Read the current IRS regs. on trader status. I guarantee 3-4 trades part time, regardless of income generated, will NOT qualifiy as trader status. Ask a GOOD cpa-he'll tell ya the same.

    Things have changed in trader qualification in the last 2 years-it's gotten a bit tougher. I know of a few "part-timers" making several thousand trades are year getting denied.

    I make 200-300 /day. Full time. That qualifies.

    40-80 trades/day, PART TIME might qualifiy in my opinion. But only with no W2 income you might be able to pull this off. If you had no W2, then far fewer trades may qualify you, yet. You have a higher hurdle to clear when you are already employed.

    If this is a critical question, ask - they'll tell ya for sure or not, that you meet the threshold for trader status, . Great CPA's there.
  8. MR.NBBO


    - The previous poster seems to have about 96-97% of his ducks in a row. Essentially nothing I can disagree with on his site...just don't like the way its "geared", very slight grey area in some of it....but far better than most.

  9. Ebo


    Oh good another CPA "Pissing contest"!
    You can not post a link unless you pay for space FORUM.
    Gimme a break.
  10. MR.NBBO


    OK, ebo, if thats directed at me.....then I use greentrader tax....look 'em up. They just know what their doing, many others do too. So piss off & pay to post your Sh*t where someone cares.
    #10     Mar 31, 2004