Husband & Wife Trading Partnership

InTheZone · Jun 26, 2003

Anyone out there have a husband and wife trading partnership for tax saving purposes?

If so, how do you divide the labors of your trading business?

Thanks for the thoughts.

-- ITZ

InTheZone · Jun 26, 2003

Robert,

Thanks for your reply.

What is the minimum capital that my spouse must contribute?

What is the minimum amount of time my spouse must spend participating in my trading business?

Thanks.

-- ITZ

WDGann · Jun 27, 2003

Robert, thanks for the post...

Always, appreciated...

Dustin · Jun 27, 2003

If you are with a prop firm, do they need to allow you to set up a sub-llc like for retirement accounts?

jack hershey · Jun 27, 2003

we trade at fixed cost for first 1mil as a "family" pooling all accounts. we each had 1 mils but they let us pool. the add ons between 1 and 2 mil are cheaper than 1 mi base costs. equities only.

max401 · Jun 27, 2003

July issue of Active Trader has a great article on tax issues of a husband-wife partnership; page 76.

InTheZone · Jun 27, 2003

Thanks Robert.

max401 · Jun 27, 2003

Quote from GreenTraderTax:

Thanks, that's the article I wrote on the subject. I write the Business of Trading column for Active Trader magazine.

Robert Green, CPA
GreenTraderTax.com
More...

Hey, you are the author; excellent article. Thank the CopyRight Gods, I didn't post it here. But, I think the article would would make an interesting and on topic post for ET members.

dotslashfuture · Jun 27, 2003

Try the Menage Extraneous Non-utilitarian Tax Advantage Loophole , otherwise known as M.E.N.T.A.L.

If you cliam your wife as a member of the partnership, she must sleep with at least one other person in the group, or you must hire a female intern under the age of 21 and sleep with her. Otherwise you are violating the spirit of the tax loophole and will serve 98.6 years in jail, or you must forfeit all your worldly goods to the Clinton Presidential Library.

This is the "Clinton Dispensation" which was left in the tax code because of partisan bargaining in the House. The Reps had to throw the Dems a bone in order to get approval for giving the entire country of Iraq to Haliburton.

If you use this thing to the fullest you are totally MENTAL , and you will not have to pay any taxes. Otherwise you will be forced to pay full tax just like all the other peasants.

dotslashfuture · Jun 27, 2003

Quote from GreenTraderTax:

Your spouse can be a minority owner of the husband wife trading partnership. For example, your spouse can contribute $3,000 to a $30,000 joint individual trading account. That would make her a 10% owner if you base ownership on capital contributions (a fair way to do it, although, other ways are possible as well).

If the minority percentage gets to small, the IRS might think the partnership is more about trying to avoid taxes and then try to block it.

Remember, it is not required that your spouse be "active" in your trading business, but if not, you do need the other factors in place (joint names on account and spouse contributing to capital).

If your spouse if "passive", then your spouse still gets all benefits except spouse has investment interest expense rather then business interest.

It is not hard to establish the factors needed to make this work well for you.

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If your spouse is a minority and you have an interacial marriage then you qualify for both MENTAL and your children will qualify for affirmative action. If your spouse is a minority and your intern is white, then you can be sued for non-preferential treatment of a minority. If you were all smoking a joint when you signed the agreement, then its a joint agreement and is non-binding.