Tax status as Daytrader

Discussion in 'Taxes and Accounting' started by The_Z, May 21, 2007.

  1. The_Z



    I am thinking about setting up an LLC to trade through so I can have "trader in securities" status for taxes. Would you say that most full-time day traders are in this tax status?

    Isn't this the way to go rather than trading as an "individual"?
  2. Surdo


    Unless you are making big wood it really does not matter.
    If you like the way "LLC" sounds by all means form one.
    Why not ask an accountant instead of soliciting free help?

    el surdo
  3. cstfx


    Google Robert Green, CPA. He has talked on length about how to qualify for trader tax status w/o creating corporarte identity. You may find what he has to say useful. Also, check out Dailyfx forum.
  4. I've filed as a "trader" in recent years. You don't need to set up an LLC - my tax advisor instructed me.
  5. Aok


    You do not need a LLC or any type of corporate shell UNLESS you are trying to accomplish very specific things.

    What you do need to do is two things to start.

    1st) Educate yourself at least a little. Then take $1000< and rent yourself some professional advice and see if its even practical to claim trader status. Consider it tuition. The IRS doesnt take too kindly to turning on/off trader status like a light switch. Its not a elective without consequences.

    2nd) Realistically consider the need after educating/consulting on your own. There is ZERO need for trader status unless you have consistently been making $$$. If you have not made 50k each year for the last 3 years, forget it. Work on that task first and keeping your trading costs as low as possible. 50k is a generously low figure.

    3) Forget that nonsense of domiciling in Nevada or Delaware to evade state tax. Work on becoming very wealthy and then hiring a tax lawyer/law firm rottweiler of your own to take on the IRS and live where you choose.

    In short, hone your trading edge then get professional advice to keep as much as your profits as possible.

    After that you can look into expatriation. Lol.

    Good luck.