Am I correct in saying that profits from a prop firm are 1099-m income and not considered short term capital gains ?
If they are a BD, and you get a K1 because you are a partner, you're earnings should be 60% capital gains and 40% ordinary income.
@rmorse does that mean that you pay 15% on the 60% and whatever your income bracket % is, on the 40%?
I expect this is up to date, but your prop firm CFO should be able to confirm. The American Taxpayer Relief Act of 2012 (signed on January 2, 2013) made qualified dividends a permanent part of the tax code but added a 20% rate on income in the new highest 39.6% tax bracket. (40%) Ordinary dividend and short-term capital gain: Tax rate is same as ordinary income tax rate. (60%) Qualified dividend and long-term capital gain: Tax rate is 0% for the 10%–15% brackets; 15% for the 25%–35% brackets; and 20% for the 39.6% bracket.
Trade futures/forex can get 60/40 LT/ST split regardless of holding period. Trade equities, hold for more than a year get 100% LT cap gains.
It would have to be a customer account, not broker dealer, and hold equities past the long term holdings period.
All that is good, but it doesn't favor the intraday trader much. Appreciate your posts on this @rmorse and @onemoreshot