Trading Tax Free

Discussion in 'Taxes and Accounting' started by BlueHorseshoe, Mar 31, 2003.

  1. Stumbled across this article in the NY Times:

    "Help for Bad Times Now Helps Rich

    Fifty years ago Congress, trying to help farmers and others having a hard time getting insurance, allowed the creation of tiny, tax-exempt insurance companies. Now, some of those taking advantage of the program do not make their living off the soil.

    One is Peter R. Kellogg, a billionaire Wall Street investor who has used the insurance exemption to escape more than $100 million in taxes on investments in four years. Eighty-five hospitals in New York State have avoided $27.5 million in taxes over five years. Alfa Mutual Fire Insurance in Montgomery, Ala., saved $58 million on federal corporate income taxes over three years ..."

    This practice really pisses me off but will forgo the ranting.
  2. Simba


    perhaps we traders should each start our own insurance company, to legally shelter our trading income. According to the article you mentioned above, this is how it's done:

  3. doctoroe


    You can always trade your IRA. No shorting, no margin and usually only selling and buying calls. But no taxes on that money until you are old and gray and ready to take it out. Many direct access brokers take IRA accounts too. What's not to like?
  4. jessie


    If you want to trade short and leveraged, you can trade futures and options on futures in your IRA without restriction. Futures margins are not considered "loaned" money, they are a performance bond, so they are exempt from the no-margin rules in an IRA. There are lots of trust companies that will work with you to do this, and most futures brokers are familiar with the process.