Taxes with an LLC

You're telling me if i set up an llc and trade futures or stocks in that llc and then pass threw the income after all expenses are paid is not subject to fica taxation?I say thats 100% wrong. Go read robert greens web site who's the father of trader taxes. The whole idea of setting up an llc for traders is to generate fica taxes in order to write off your health insurance and to be able to do a retirement plan.Go do some more research and get back with us

 

Well, there are certainly other reasons to create LLCs, and the things that you mention are certainly valid (assuming that you adopt mark-to-market accounting for your firm). If you do that (and make your trading income effectively earned income), you can in fact take those deductions. However, most *futures* traders (which was the OP's question) wouldn't do that (even according to Green), since you lose the preferential tax treatment for futures by making them income. The tradeoff for most futures income, if you're profitable, isn't worth it, and you're better off establishing another method for creating earned income to take the deductions.

BTW, Green's advice and analysis is generally quite good.

 

I give up.
All this is common knowledge to those of us who are professional profitable traders.
Go ahead and pay self employment tax on capital gains, and don’t deduct any of your expenses. Obama needs the extra revenue.

 

Been here since 2002 and over 2500 posts and you don’t know the difference between an investor and the IRS designation of “Trader in Securities.”

 

You could run your stock trades threw an llc and keep your futures trades threw yourself to keep the 60/40 gig. I'm a mtm trader and i elected mtm for stocks only and not futures. you can also have seperate brokerage accounts for longer term stocks to get the favorable long term capital gains. as one poster said if you're a 1 person trader theres no real advantage to doing an llc.

 

i know the difference..and i know the complications that come's with trader status. thank you,but no thank you..
i file as unemployed individual.plain and simple,easy to do by yourself.
and let's be honest-there is nothing to deduct in this business anyway..
couple data subscriptions and internet..cost about 1-2K a year..it's nothing,if you make decent money
ability to write down unlimited losses? no Thank you..losses are not my specialty either

 

thanks gearhead and opt...I agree and it is better for an individual to read pub 550 or the actual tax code than your broker's or someone else's blog about taxes. As gearhead says the tax code is certainly up for debate and mileage will vary.

 

Let's see, I owned an S Corp which is very similar in attributes to an LLC. So why should I take you seriously again???

 

Something else for people to consider, the concept that using an LLC can help separate your personal assets from your trading "LLC" assets is baloney. Unless you are a giant trading firm, every broker and every vendor will make you sign, making you personally liable for your debts.

Secondly, very few traders will find any use for the "liability" protection. It isn't like some 15 year old is going to trip and break his neck over your futures positions and then sue you.

And any criminal matter will wipe away your "liability" protection also.

As many have said, the best thing for most traders is unemployed, and considering your profits as capital gains. No 15+% SSI that way