Tax question: Capital losses and K1 Income

Discussion in 'Taxes and Accounting' started by Lights, Nov 5, 2011.

  1. I have some capital losses in a retail account (<50 trades) and my K1 for a money up prop firm will reflect an income for year 2011.

    Can these losses offset K1 income?

    I have trader status and M2M, but was told that due to the fact that I had not traded enough in the retail account (need 500 trades), I cannot have capital losses treated as ordinary losses and that account will be looked as an investor account, and not active trader so I cannot offset. That doesn't sound right to me since I go through thousands of trades a day in my prop account with my capital at risk.

    Anyone have experience on this?
    Thanks in advance