Income Taxes and Record Keeping ( tax ) Message Board

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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )

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To: Box-By-The-Riviera™ who wrote (428)	1/9/1998 1:41:00 PM
From: Colin Cody	Read Replies (2) of 5810

Yes you COULD swing back to INVESTOR if, for example, you didn't have the VOLUME as you say... and what I am saying is if you flop back and forth then maybe you aren't really actively devoting a bona fide effort in this so-called trade or business that the taxpayer is presenting on Schedule C. . Generally speaking, for something over 10 years now, a Schedule C showing a negative taxable income (which is what 99.9% of Traders Sch Cs show) is a BIG RED FLAG. . Just look at the bottom of Schedule C today. Several years ago they added MORE disclosure statements for only those Sch Cs that have a loss on them. . ANY Sch C showing a loss is at RISK of being challenged. . Any TRADER having a Sch C loss AND operating out of his HOME is even more at risk (see the bottom of the Sch C). i.e. having an OFFICE outside the home "is better." . Flopping back and forth only weakens, make that SEVERLY WEAKENS, your case. . Think of it this way: How may tax PROFESSIONALS, CPAs, EAs, Tax Attorneys, Financial Planners, etc have ANY inkling of the items we are discussing here? Not many I think you will agree. I'd venture to say far LESS than 1% would be able to even DEFINE INVESTOR, TRADER and DEALER correctly. Don't you agree? . Now think about the IRS AUDITOR. What do you think HIS understanding is going to be? . Got the picture? This is an UPHILL Battle. IMO, if you are going to do it (of course assuming it is legitimate) then you do it RIGHT. Because even if you dot all your Is and cross all your Ts you STILL could have a tough road to hoe if you are selected for AUDIT... and remember Sch Cs with losses DO GET AUDITED! . Colin

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