When you receive a K1 From a prop firm

Discussion in 'Prop Firms' started by Sky123987, May 13, 2008.

  1. I know that if you do not trade w/ a prop firm, you'd probably want to elected to do mark to market (something like that) style of taxes which avoid the wash rule.

    Problem with this is that if you have say 50,000 of unrealized gains in your investments you now have to pay tax on that.


    So...

    1) if you make 100,000 @ a prop firm and recieve a K1
    2) Make 50,000 of unrealized gains from your long term investments


    Do you just have to pay tax on the 100,000? or will you have to pay tax on the 100,000 + 50,000 of unrealized in order to avoid the wash rule.

    Basically what I asking is does the wash rule apply when you recieve a K1?

    Thanks
     
  2. (Not tax advice, personal opinion only, nothing related to Bright Trading or any of it's business relationships).

    K-1 will be "mark to market" - but in your retail account I think whatever election you chose would apply. The K-1 is just one number added as ordinary income. That would be my guess.


    Don
     
  3. thank you don.
     
  4. i do find it interesting that posts regarding taxes get very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very very little interest.

    Does anyone actually make any $ on elitetrader?
     
  5. you've asked many questions on trader taxation. what you need to do is spend $200 and spend 1 hr throwing 100 questions at a trader cpa. its that simple. why would you base your business off many unknowlegable people on et? the answer to your question is if you get a k-1 its mtm. you can also have an investment account marked for investments only and get the long term capital gains treatment when you sell the positions
     
  6. you're right