Len, Let's start over.
You asked:
>>But since you've taken the "trader" status, your loss
>>should be an "ordinary" loss, not subject to the "capital"
>>loss restrictions. What's the fix?
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QUESTION FOR YOU: Why do you believe that you as a TRADER get to deduct more than $3,000 in transaction losses (short-term capital losses)?
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You said:
>>Certainly anyone's first inclination would be to have a Schedule C >>showing the gross proceeds, and then deducting the appropriate >>expenses, including the cost of the securities purchased, in arriving >>at a net gain/loss for the year.
NO, you are describing the reporting requirements of a DEALER, not of a TRADER
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>>Alternatively, you could start with the net gain/loss from the sales, >>then deduct the expenses. But because of this 1099B tie-in, you >>are precluded from this.
Subject to any change in the law as it stands today, I agree.
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>>Therefore, your Schedule C will only show your expenses, thus >>producing a loss each year from that "trade or business."
You are basically correct.
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>>Wouldn't you then face some kind of hobby loss rules
>>when you file this way?
YES that is an issue to be faced. Such is the strange animal of TRADER STATUS. Helps keep some of us CPAs living in the high rent district. (g)
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Colin |
