Taxes at a proprietary firm.

Discussion in 'Prop Firms' started by prospective_25, Jun 26, 2001.

  1. I am looking to join a proprietary firm to trade a firm's capital, but want to make sure I understand how I will be taxed. I am a single 22-year old. I know if I make a draw on my profits(or future profits) I will be taxed like it is income tax.

    Will my profits have been taxed otherwise (such as some form of capital gains tax) before they are taxed a second time as income tax?

    Any estimates?

    Any kind of clarification would be wonderful...thanks in advance!
  2. Hi. Most firms now have an LLC at the end, and will issue you a K1 at the end of the year. Also most of these will select an election in a tax code that will distinguish you as a trader. This is of a great benefit to us, since we will not have to pay social security and fica tax. This amounts to 15.3% on the first $70K or so for singles, and 3% there after. Plus you will not have to go through all the schedule D transactions.