Trader while having a full time job- A TAX question

hajimow · Feb 10, 2012

Quote from opt789:

I will agree with Bob that an entity is the way to go, but there are some problems with single member LLCs. I would also disagree that a single member LLC will protect your assets, most brokers have you sign a personal guarantee, but I am not an expert on that. I would suggest a simple partnership if he is married. One of the deductions of active traders is the home office, but with another job I donât think he can get away with that. Therefore his only deductions will be direct expenses and he has to decide if it is really worth the hassle. The IRS has already won against traders with other jobs, so he is fighting a hostile enemy and an uphill battle.

How much does he really have in direct expenses? Even at $2000 per year in expenses and a 30% tax rate that only saves him $600 per year. The simple time and trouble of forming an entity, then having to pay extra every year to have your entity taxes prepared and filed it may simply not make any fiscal sense to bother with it.
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I am not sure how much expenses he has. I believe he is pissed that he should write a big check and say good bye to 30% of his profit while his eyes were glued to the monitor for thw whole year. I will ask him about the expenses. It should not be that high I suppose.

oldtime · Feb 10, 2012

Quote from hajimow:

I am not sure how much expenses he has. I believe he is pissed that he should write a big check and say good bye to 30% of his profit while his eyes were glued to the monitor for thw whole year. I will ask him about the expenses. It should not be that high I suppose.
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he's going to pay the same cap gains rate on his profit whether he is pro or not

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Trader while having a full time job- A TAX question

hajimow

oldtime