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Strategies & Market Trends : Income Taxes and Record Keeping ( tax ) -- Ignore unavailable to you. Want to Upgrade?

To: Brendan W who wrote (419)	1/8/1998 10:22:00 AM
From: Colin Cody	Read Replies (2) \| Respond to of 5810

Switching BACK & FORTH between Investor/Trader status would be a problem. IRS could take position you were either - their choice! . It is OK to have SOME investments. But the courts have not ruled on the NUMBER of TRADES, nor the NUMBER of COMPANIES you have stocks in. . If with those 20 stocks "you trade" you sell them for QUICK, VOLATILITY changes ("having no over night holds" was just my example) RATHER than selling on NEWS or developments, AND you spend CONSIDERABLE TIME making your buy/sell decisions on those 20 stocks, AND you do this, as you say, 9am to 4 pm every trading day - THEN that, to me, looks like a TRADER. . THEN you say you have 100 more stocks you HOLD. These might pay DIVIDENDS (a "problem" per court cases) and these are bought expecting them TO GROW. This COULD cause a problem. . IMO a problem would NOT be if: You do NOT spend A LOT of time EVERY DAY working on these 100 stocks. You do not constantly trade in and out of them month to month, but you BUY & HOLD once your INVESTMENT DECISION was made. . Then I would say these 100 stcoks were your INVESTMENTS and that leaves you with ample time to TRADE for MARKET SWINGS full time. . You might put the INVESTMENTS in a family member's name to "cinch" the separation. Or you might have TWO broker accounts (same brokerage or not makes no difference to me). One account will have THIS title for the name: "Brendan Watt, TRADER ACCOUNT". . The other account will be in a family member's name, or if in YOUR name, will be titled "Brendan Watt, INVESTMENT ACCOUNT". . Then make sure you do your taxes accordingly, or get a preparer FAMILIAR with trader status... . I'm in CT, if you need any assistance, Colin