Tony, If a multi-member LLC (or corporation) is established for the purpose of trading stocks, and if it is done properly, honestly, and a bona fide attempt is made to operate the LLC as a Securities Trader (continuous & substantial activity etc), there is no commingling of funds and other personal activities etc, then yes, this entity would file its own tax returns (form 1065) and the individual members would report their gain or loss (subject to the various rules, including the "at risk" rules, etc) on their own form 1040 via the 1065 Schedule K-1 submitted to them.
The cost of going this route I suggest to traders is from $750 to $2,000 extra per year (legal & accounting and State fees) over and above what they'd spend going the sole proprietor route. I also generally suggest that the formation of the LLC might run $500 to $1,500, as done by a qualified attorney, and further, that for most people a local/domestic LLC is preferable to establishing a foreign corporation formed in say Nevada.
Nevada or other sites are generally for super aggressive (State) income tax avoiders/evaders. They are okay for super wealthy persons who have no need of desire to use their cash, but then generally these types of people don't go surfing the internet for their tax planning either ;^)
Colin Cody
traderstatus.com |
