GF, that is a deep one.
For starters, use the following link:
www3.techstocks.com
I strongly suggest the first two links from that page here at SI. Both are very good.
Trading and investing are, for the most part, handled the same unless you file for a trader status. You will still need to keep track of your buys/sells, losses/gains and costs and report them on your sched. D. This can be a daunting task if you don't keep a running total of your trades on, at least, a weekly basis. I know I get lazy sometimes and watch those trade confirms pile up knowing that if I don't do them soon, the pile will double.
I keep mine in Excel and update it often. It will save you money in the end at your tax specialist, they WILL love you for it.
You would be surprised how many traders do not know about the wash sale rule. Please, Please, read a bunch of the posts from the link above. You will get quite an eductation.
Secondly, if you trade often and consistent, you may file as a trader and elect for a Mark-to-market accounting method. This eliminates the wash sale rule for traders, but certain restrictions do apply. Most importantly, you do not have to worry about the $3,000 captital loss limit....if you are a trader status, this is waived and all losses and gains are added/subtracted from ordinary income. It is a very new law with much still to decided the Govt. I have not found anyone locally here that is knowledgeable in these practices. In fact, the two people I went to I should have charged them for seminar on day trading, how it works, what is and what it can do for you. :)
Hope this helps. Definitely use the link above, there is a lot of good information and further links to some tax people that specialize in tax issues for traders.
Luck to you.
Jeff |
