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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )
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To: Mark Davis who wrote (3890)8/5/2001 9:56:30 AM
From: Colin Cody  Read Replies (1) of 5810
 
Mark, I have seen tax returns, prepared as you have suggested, occasionally done in a prior tax year when I first review with a new client. Such a presentation in the past was IMO silly at best and now since 2000, it is specifically an inaccurate procedure, per the IRS.

Sometimes I need to file amended returns for such incorrectly prepared tax returns and some taxpayers get audited because the tax returns look suspicious under such a presentation.

Back to Sec 179... You need to use the assets predominantly in the daytrading business (not also used for your investments to any great extent) and you must have taxable income (simplified) as follows:

net capital gain from the daytrading business on Sch D
less the trader status Sch C expenses
less the Sec 179 costs.

If you still have taxable income after this, then yes, you are entitled to the Sec 179 deduction on form 4562 & Sch C. Be prepared to justify your position, if challenged by the IRS.

Colin Cody, CPA
traderstatus.com
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