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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )
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To: kaz who wrote (2038)3/21/1999 8:33:00 PM
From: Colin Cody  Read Replies (1) of 5810
 
It's just semantics. There is no rule that you have a "long-term account". But a trader may certainly have an "investment account", and such investments may in fact be long-term in nature, but they could be short-term as well.

If a taxpayer has too many dividend yielding investments he may be classified as an investor, rather than as a trader. Segregating dividends into a separate account does not make you qualify as a trader, what it does is qualify those "investments" of a trader to be excluded from the MTM method.

If your broker charges a whopping big COMMISSION on the first ticket, well, the IRS would likely go for SUBSTANCE over FORM and disallow this scam. On the other hand, if it is truly buried on the ticket, and called "commission" then it is perhaps only your word (in an audit situation) that the "commission" is really a data fee.

The law, IMO, is clear. Fees for data may not be part of the basis of the stocks. Commissions and mark-ups are part of the basis.

But in your case if you are marking-to-market neither the fees nor the "trader status" stocks are taxed via Sch D anyway! As a MTM taxpayer the fees go on Sch C. If the fees are charged for your investments, then they'd go on Sch A. Therefore it might behove you to incur data fees for daytrading activities, rather than for investing activities.

Good luck!

Colin
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