I'm in my first year of trading with a prop firm, have been "paying for my education" in the market, and expect to have a net loss reported on my 2003 K-1 form. Not being familiar with K-1 reporting I'd like to know what happens with the loss tax-wise. I assume it offsets other income for 2003 but what if it is greater than all my other income? Is there any "carry forward" provision for the loss as there is with capital gain/loss? Or does the loss just evaporate with 2003, never to be seen again on subsequent tax returns?
it will be treated as a capital gains loss. You can decuct up to $3000 against regular income each year. If you have over $3k in losses it will carry over to the next year. Hopefully next year you will make money and you will get to decuct this years losses from next years profits. Happy trading.
Actually, as a professional, receiving a K-1...the gains are "ordinary income"...and I will defer to an accountant (Bob Greene?) to respond to the losses part.....and stop having losses!!! Much easier to report gains!! Don
This brings back memories of JNPR. I held 200 shares from 50 to 30 in 2001 when I was just starting to get interested in the stock market. I still consider selling at 30 one of the best decisions I have ever made, especially considering how I knew nothing about trading at that time. Anyway, I ended up with a capital loss of $3460 in 2001, I lost my job, my mother found out she had cancer in the final stage, and a few days after all that the world trade center was destroyed. Now I will never know how the average person has dealt with the collapse of the towers. All I know is that I will never be anything like the person I used to be before.
This statement brings back memories of filing my 2002 tax return. I spent countless hours on preparing a statement in place of hundreds of Schedules D1 to report my $4000 (or however much it was) gain from stock transactions, and then I used my calculator for about one minute to figure out my $200 (or something like that) loss from the eminis. I am already getting sick at the thought that I traded about 10 times as much (equities) in 2003 as in 2002, and I have not filed that MTM thingy people keep talking about. It looks like I have three options now: Spend all December playing accountant, shoot myself between the eyes, or catch a plane to South America.
You may need to talk to an accountant that specializes in trader's taxes. The past few years I have never listed individual trades on Sch D. Just a summary of the totals and a statement that detailed information is available upon request. IMHO, No IRS paper pusher wants to go through hundreds of trades if the totals match your broker's statements. You might want to see the end of this link for more info: http://www.pan.net/taxes/Trades&taxes.htm Jack