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Strategies & Market Trends : IRS, Tax related strategies--Traders -- Ignore unavailable to you. Want to Upgrade?

To: Colin Cody who wrote (102)	2/20/1998 9:28:00 AM
From: Len	Read Replies (1) \| Respond to of 1383

Thanks, Colin, for your reply. Unfortunately, I asked two questions, so I'm not sure what you are referring to with " YOU DON'T." While I thought I had been quite specific while keeping it brief, I'll try again. First, assume you are qualified for "trader" status. Next, assume that your trades produced for you a net loss. (So sorry) Now, after you have shown the trades, or a summary total of them on Schedule D, assuming you have no carryforwards or other adjustments to the total, how do you get any more than $3000 of the loss transferred to the front of the 1040? The natural flow of the form limits you to that amount. But since you've taken the "trader" status, your loss should be an "ordinary" loss, not subject to the "capital" loss restrictions. What's the fix? By the way, since we now have to tie in the total proceeds from brokers' 1099B's to a like total on our Schedule D, it is clear to me that there should be no question as to where the trades are reported. Here I agree with you. But this brings up the other question. Certainly anyone's first inclination would be to have a Schedule C showing the gross proceeds, and then deducting the appropriate expenses, including the cost of the securities purchased, in arriving at a net gain/loss for the year. Alternatively, you could start with the net gain/loss from the sales, then deduct the expenses. But because of this 1099B tie-in, you are precluded from this. Therefore, your Schedule C will only show your expenses, thus producing a loss each year from that "trade or business." Wouldn't you then face some kind of hobby loss rules when you file this way? Thanks for all your help to this thread.