| |
I disagree with "ahhaha" in his or her dismissal of John Doe qualifying as a trader. Whether or not someone can qualify as a trader depends on his or her specific facts and circumstances.
We represent our clients in IRS examinations and we defend their tax positions taken. We will not take a position unless we feel it is justified, the client is comfortable with it and we both will stand by it.
We also strongly disagree with ahhaha's point about it being harder to qualify as a trader now. Computers, software programs, the Internet, and on-line brokers have all contributed to making it easier to conduct a trading business for short-term trading profits. Most investors use mutual funds as an investment vehicle rather than on-line trading accounts. Just look at some of the advertising of the on-line brokers. For example, DLJ Direct's new television commercial talks only about "trading" not "investing." They mention all the trading tools, free trading research, ability to trade at the push of a button, fast and to catch trading swings in prices all at very low cost. Financial television bombards viewers with messages of 'you too can be a trader like the professionals on Wall Street using the same tools and having access to the same research and market information.'
We merely wish to educate traders or would be traders about tax rules for traders. Most people are unaware of these tax rules and many are forgoing their rightful opportunity to deduct real economic losses from their trading business activity. This is not a tax sham as ahhaha implies. We are talking about deducting real cash losses and not being penalized by not being able to ever deduct what in some cases are very large losses.
Yes, many people may try the trading business and loose $50,000 before they realize that this was an unwise activity for them. They then revert back to being an investor. Yet they are stuck with $50,000 of trading losses that they may never be able to apply to future capital gains, especially if the market trades side ways for a few years.
We encourage postings on this thread about the tax law and the tax law for traders. It is easy to say "no" to tax positions, but it is not so easy for some people to pay an extra $25,000 of taxes that they may not rightfully owe. |
|
