IRS, Tax related strategies--Traders Message Board

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Strategies & Market Trends : IRS, Tax related strategies--Traders

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To: Street Walker who wrote (29)	2/16/1998 2:45:00 PM
From: Box-By-The-Riviera™	Read Replies (2) of 1383

The basis for trader status has only been "finally" determined by tax court cases. There is no actual IRS ruling concrete enough to let you determine your risk pre-audit before you file. You risk having to defend yourself in an audit....and the variables are somewhat obvious, the knowledge of your auditor, how good your attorney or cpa are if they go in with you etc etc etc...... BTW: if you declare this status.....your losses are NOT relieved from the $3000 rule.... since you will still report gains/losses on Sched D..... however, if you choose to mark to market....then your income will become ordinary...and will be reported on Sched C.....relieving you of the $3000 loss rule....BUT....you will then pay self employment taxes.... Other expenses (without mark to market election) however can be deduced on Sched C....where prior only on Sched A....... this would be one real advantage of trader status for deducting trading related expenses like the ones you described....if you are prepared to defend yourself in an audit. Joel

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