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

To: mod who wrote (183)	2/27/1998 12:24:00 PM
From: Colin Cody	Read Replies (1) \| Respond to of 1383

Dennis, Yes and No. I see that could be a nice little situation! But it depends on how you do it. Unfortunately, "Ordinary Income" does not allow one to take a SEP-IRA contribution. EARNED INCOME does allow a SEP-IRA. . If a Trader paid a consulting fee to a SPOUSE then the Trader would get the deduction on Sch C and the Spouse would pick up the same amount on another Sch C. THEN that ONE spouse would be able to have a SEP-IRA. . But I am not sure how the OTHER taxpayer gets an IRA??? As a Trader that spouse would have A Sch C LOSS and therefore no SEP-IRA. . If you meant that the ordinary income was not from say a consulting fee, but as some here on this BB say from your trading of stocks and securities at a profit... That doesn't fly, IMO. . Stocks are Capital Assets and they may not be put on Sch C. This issue was pressed in Tax Court for the same reason you stated - to make an IRA contribution. The IRS won, the taxpayer had a non-deductible IRA contribution and had over-funding penalties too. . Colin . I believe a taxpayer gets "as good" a deal by bypassing the SEP-IRA and buying a State-Tax-Free Mutual Fund. OR today doing a Roth IRA. Only exception is if you need/want to pay into Social Security, say if you were very close to retirement age and wanted to bolster up your potential SS checks.