My understanding is if you join a pro firm, at the end of the year you get a K-1 form that basically lists your profit (loss) for the year, and that's it. In other words, the basic information would be your name, tax ID#, and just one number for P(L). Is this correct?
Yes, and the number you pay taxes on can be "net net" if you submit "outside" expenses to the firm for reimbursement. Exemption from FICA (self employment tax) is an additional benefit. Don
Just a heads up. You can be 'exempt' from self employment taxes as a retail trader also if you elect MTM. Not just the exclusive domain of pro firms.
Thanks for the quick replies. Actually, the reason for my concern has to do with trader status. I just talked to my accountant, and he was concerned because I had a month in 2001 in which I didn't do any trades. I have to send him an explanation, because he wants to make sure the IRS won't disallow my trader status because I took the time off. Now this year I'm taking even more time off from trading to study for my Series 7. If you take much time off and get a 1099, like from a retail brokerage, the IRS can just look at the trade dates and see when you worked and when you didn't. Automatic red flag if you took time off. If you get a K-1, they can still find out how much time you took off, but they have to dig deeper. My point is, I don't want to start trading again this year if I'm going to be subject to the wash sale rule. I can't even imagine dealing with that. I would think that taking the time off to study for the 7 is legitimate, though.