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Non-Tech : Traders-Unlimited tax losses, unrealized
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To: Robert A. Green, CPA who wrote (2)1/24/1998 2:55:00 PM
From: ahhaha  Read Replies (2) of 15
 
I don't imply that the trader status is a tax sham. It's a valid status for those who make their living trading. But your representation of a theoretical individual whose primary employment and dependable source of income is outside of trading relegates the trading activity to hobby status and thus trading gains are added to ordinary income. Expenses incurred to implement hobby status trading activity are not valid expense deductions and capital losses are limited to 3Gs against ordinary income. It is also necessary to establish that your income is from trading over a period of years. You can't flit in and out of this status. In the past it took three years of profitable activity and a certain minimum number of trades before you could achieve the trader status. Now, the IRS reviews each claimant status and makes its own decision as to whether you qualify.
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