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Strategies & Market Trends : IRS, Tax related strategies--Traders
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To: Colin Cody who wrote (182)2/27/1998 12:05:00 PM
From: mod  Read Replies (1) of 1383
 
Colin,

I've used a variation of this strategy in the past, in conjunction with filing as a trader. The sole reason was to generate ordinary income so IRA-SEP contributions could be made. By making payments between spouses, IRA-SEP's can be done for each. Since you are filing jointly, the losses and gains all appear on one return. You become liable for self-employment tax on the payments, but the IRA-SEP deduction basically evens that out, so it is revenue neutral from the IRS perspective for that year (which I assume means they are less likely to hassle you about it). I don't use this method any longer, as I now have a fully funded IRA, but it was useful for a while.

Dennis
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