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Strategies & Market Trends : Active Internet Traders - tax questions & answers
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To: Jon K. who wrote (2)1/24/1999 4:03:00 PM
From: Robert A. Green, CPA  Read Replies (1) of 31
 
Thanks, here are some answers.

1. Traders who elect mark-to-market (MTM) accounting can report trading losses on Schedule C, on the Other Income line (enter as a negative amount for losses). It is a good idea to first report all trading activity on Schedule D and then transfer the trading amounts for MTM onto Schedule C with a footnote reference. We explain all of this and give a footnote example in our Trader Tax Guide.

2. Daytraders qualify for the trader in securities tax benefits and they can elect MTM. Someone investing in tech stocks for the long term and maybe trading them a few times per year on unusual market changing news does not qualify for the trader tax benefits. All situations in between need to be addressed on a case by case basis. The most important aspect of getting trader tax benefits is making the right decision about whether your qualify or not. Our Trader Tax Questionnaire can help you make this determination. We also help many traders by evaluating their Questionnaire answers.

100 trades per year can be enough in some circumstances, but in many other cases it is not enough. It is not just a question of the number of trades or the number of hours spent on your trading activity but also your intentions and other subjective factors.

Our Questionnaire only costs $15 (available at our Web site), it contains the tax laws and it should be very helpful to those who are not sure if they qualify for trader tax benefits.

greencompany.com

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