Brendan,
I have not looked into these answers, and don't know if I will have time to research them, but here are my answers based on a common sense approach. You best get accurate, researched answers and not rely on what I am saying herein, but I thought I would offer the common sense analysis anyway.
If the money you are trading is in the IRA and therefore not taxable, on what basis on the tax return are you claiming trading status? There is no income to report from trading so I think that the deductions would be disallowed. It is an interesting question. Too bad you cannot carry the deductions forward and offset the taxable income when you start to draw from the IRA. Heck, maybe you can, I don't know, but I doubt it.
I believe if you re-read the post:
exchange2000.com
I did not contend that you absolutely cannot hold for 12 months or longer and still be a trader. However, the intent behind the actions of the deemed trader are what is important. If I buy and hold MSFT, INTC, DELL and a few others, but I trade the heck out of the rest of my money and it is a substantial amount, then I would think trader status could still be taken and argued for successfully. The point is there are no hard and fast rules. It is an area studied and determined on a case by case basis. The more you fall into a trader overall, the more your case is bolstered. However, holding periods appear to be critical to the overall analysis and each court would decide something a bit different than another. I would personally do a simple mean average to come up with holding period. However, I did not research that very issue and that may be incorrect or you might find different courts do it differently.
Without knowing your exact factual situation I could not give you my analysis. This is one area where I might say you are a trader and a person sitting next to you with a similar but slightly different set of facts would be an investor. This is a very difficult area to say anything with certainty. I think the Congress does this on purpose so that all of their lawyer buddies practicing in the tax area can remain in the loop. It is a shame in the long run as it is an economy that doesn't really produce overall tangible benefits for society. I don't remember the figure, but the amount of dollars spent in tax compliance in a year are staggering. Imagine if that money was spent in R&D or other more worthwhile endeavors.
Crazy world out there.
GO PACK GO!
-Scott
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