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Strategies & Market Trends : IRS, Tax related strategies--Traders
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To: Colin Cody who wrote (27)2/16/1998 3:21:00 PM
From: Robert A. Green, CPA  Read Replies (2) of 1383
 
The tax code does not say a trading trade or business or for that matter any trade or business has to be "full-time." Do you think America's billionaires work full-time at any one of their 100+ trade or businesses?

Many of us are employed at a job but we also have time to trade securities as a trade or business. A job takes 40+ hours per week Monday to Friday 9 to 5. We have mornings, nights, weekends, and Internet access at work. Many of us make security trades and conduct research during the day at our jobs.

Many of us want to have a business of our own to supplement our wages. A trading business on the Internet is a great business for those who know how to make money doing it. It's fools gold for those who do not.

For those naysayers about trader tax status, consider the following possibility. You are a trader (you trade daily and frequently, with the intention and goal of short-term price swings, etc.) and you report a long-term capital gain of $100,000. The IRS audits you and takes the position that you are a trader, not an investor and you are not entitled to the long-term capital gains rates. What do you do then?

Like it or not, believe in the naysayers or not, afraid of the IRS or not, you are required to know what your tax status is and follow the law accordingly.

Good luck,
Bob
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