I have a C corp that been posting a loss for the past couple of years. I have been trading as an individual and of course pay taxes on my gains. I am thinking of starting to trade under the C corp as I would then offset the losses but i worry that my gains will be hit with heftier taxes. Thoughts ?
Most any CPA would be able to devise a plan for you. And a CPA (or EA or other tax pro) should be involved with the complexities that you described.
check with a cpa ... if its just you as an individual trading then I fail to see any advantage to working within the structure of a C corp. If you are concerned about earned income there are better structures for an individual.
I have losses in the C Corp...so I was thinking the gains would offset the losses. For example my C corp has no sales or gross income but it pays my health insurance buys my car etc etc etc... I have about $55,000 in expenses. My trading profits, lets say they are $55,000 so now I am breakeven and no tax due right ? If I make the $55,000 as an individual I am going to pay some tax. All my trades are short term cap gains. My CPA recently retired to Washington State and is no longer available. I was with him for 25 years so finding a new tax person someone isnt going to happen quickly. Thanks
I have been thinking about using a C corporation too. NOTE: This discussion should not be a substitute for competent professional advice. The biggest disadvantage of a C corporation is trapped losses. If you take a loss in a C corp, there is no way to offset personal gains or income. The loss gets "trapped" until you have C corp gains to offset it. An S corp allows you to pass the loss through to your personal return, but the S corp does not allow the cushy benefits that a C corp does. If you take corporation profits as a dividend, the gains are taxed twice. If you take profits as a salary, you can maintain a pension, but then you pay self-employment tax (equals SS contribution). As a trader in a C corp, you can also be subject to the personal holding company tax, which is a punitive tax, but that's only a problem if you have taxable income. Any trading entity (C corp, S corp, LLC, LP, etc) entails extra record-keeping, accounting fees, taxes, etc. If you trade NYSE stocks, NYSE charges a lot extra for quotes for a non 'natural' person. One of the advantages of an entity is that it is less likely to get audited, as most auditors are not qualified to audit entities, and the ones who are, tend to focus on larger entities. I have a C corporation that I have not yet used for trading, and I am trying to decide whether to liquidate it or use it for trading. I would like to hear more ideas.
that seems like a lot to do... I am looking for easy. I am lazy and can handle a little accounting work but dont want it all tied up in a life insurance thing. Appreciate the answers. I hope RWK can figure out which is the way to go. I have some profits in my C corp this year due to some trading. have some losses from the last couple of years as I was then trading as an individual. I wonder if I can use those losses from the last 3 years to offset this years profits?
thanks...like I said my accountant moved so i am struggling with a do your own tax software from TURBO Tax. They have a section on NOL's and honestly never even heard of them. I was in business for 25 years and always had a profit After selling the business end and keeping the assets I have had losses past 3 years. I read the NOL information and was confused. thanks for clearing it up.