Cache, my CTA is managed by Corp C, but we had discussion on Elite some time ago in which double taxation issue was used as argument against Corp C vs. LLC. Could you briefly clarify advantages and disadvantages Corp C vs. LLC for trading purposes ? Thx.
Well I can offer general advice on business enities (being a lawyer and who dealt regularly with ownership structures) but detail on tax issues and trading are best left to an accountant lol. Double taxation is the main drawback to a C-corp for trading since most people want to regularly draw profits. One entity I trade with is a partnership simply to track P&L between the 2 partners (ie. division of P&L) in pooled money but it is non-professional and the easiest to form in 2 seconds. Those with professional desires or the need for more detailed structure usually go for LLCs. But it is dangerous to give general answers to specific questions so I will stop
It means that second taxation takes place when profits are being withdrawn ? What about non-US shareholders ?
A C-corp pays taxes on its profits and then the shareholders are charged tax on the dividends they receive from the C-corp. That is what people are talking about when they mention double taxation. ryan
Thank you for info. When I was to choose the form I noticed that most of my honorable competition (Options CTA) held Corp C. Frankly still not sure if anything is hidden here or we just follow one another
Often when an entity has a large amount of income, they will move from an LLC or other pass-through entity to a C-corp in order to not have the income attributed to them and instead pay the owners a reasonable salary. The reason is each member in an LLC usually takes the money from the LLC to cover their tax liability and if a company is making beaucoup bucks a year, it may be better for them to have a C-corp, pay the owners a reasonable and large salary and simply pay the corporate tax and let the money grow. Of course, whenever it is dividended it is still subject to the double tax. However for many entities, deducting all expenses and salaries makes it easier to manage the cash flow than to have each member take out a nice chunk of change to pay their taxes every April. The CTA manager is the investment company manager of a fund and therefore chooses the C-corp to handle taxes and other issues while members of the fund get profits attributed directly to them in the form of a K-1. The CTA might be owned by 2 shareholders who simply receive a salary and avoid the LLC to keep their tax hit down each year of the Corp is making a lot of money managing the fund. I am making a lot of assumptions here since I do not know your facts so if I am off, I apologize.
Yes on orders for put spread and I would like to know who I gotta kill to get a fill today. I have had bull put spread orders open since the market opened today and nothing.... been using 1230 strikes and 5 and 10 point wide spreads. Still got some orders open so we will see if i get filled.