Who has experienced forimg entity for trader tax status

Discussion in 'Retail Brokers' started by oceanwave07, Jul 21, 2011.

  1. thinking of doing this with green andcompany. They told me they can do this for new entity , even after deadline for trader tax staus of april 15
  2. What are the advantages of doing this?

    I've been trading for a long while and have had numerous people try to sell me on the idea--retirement plan, limited liability, more "legitimacy"--but I don't understand what the benefits are of doing this if you're an individual trading your own money and you claim trader tax status which does not require an entity. I don't even bother with expenses on Schedule C as they are minimal.

    If you trade OPM, disregard my comment.
  3. None. Single member entities are looked upon as the same as filing without an entity by the IRS.

  4. JamesL


    That is default. Can also be treated as corp but you need to make the declaration first.
  5. to save everyone (esp new traders) a lot of time, money and frustration, just file as "unemployed" and be done w/ it. as previous poster correctly stated, this is only if you're trading for your own account. if someone tries to tell you any different immediately RUN away.
  6. I understand the unemployed staus. My question is do you file trader tax staus for mark to mark election? Deadline is passed, april 15 yes or no? a new entity, has 75 days after started to make election of mark to market accounting. One postive, can have another family, member as employee and get a discount on health insurance.
  7. unemployed, and elect mark to market election,for day trader status? Canyou make election after april 15? In an entity you can do in now 75 days after entity is formed. As a entityit is possible to get into a discount on healthinsurance for family members. You have profits sred , have family member employee
  8. the1


    The biggest advantage to getting trader status is being able to deduct more than 3k per year. To qualify your trading has to be substantial and continuous, and it must be your sole source of income. Even a part time job will probably trigger a denial from the IRS. Typically, a 2 member LP is the best trading formation.

  9. Your trading does need to be substantial enough so it isn't considered just a hobby or normal investment activity but I've never heard it needs to be your sole source of income. I've been deducting trading expenses for three years along with reporting substantial income from a full time job and never heard a peep from the IRS.
  10. You've been fortunate in the audit lotto. A full-time job is a big no-no when claiming trader tax status as an individual. I've even read somewhere that for married persons the IRS has taken the hardline position that if either spouse receives a w-2, trader tax status cannot be claimed by any of the spouses. Of course, just because the IRS takes a certain position doesn't mean that it's correct or that it will prevail if challenged. But the benefits here seem hardly worth an audit risk.
    #10     Jul 23, 2011