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

To: RookieTrader who wrote (461)	8/21/1998 12:33:00 AM
From: Len	Respond to of 1383

In all fairness, Rookie, you're being very demanding, and perhaps a little lazy.<ggg> Seriously, though, I'll try to help, but all of your questions have been answered numerous times in the past six months in this thread, and the other Tax thread, Subject 17266. If you have even a little time to read through even this one, you'll probably find the answers you seek. As to your questions, Sec 179 is, I think, the section that relates to expensing depreciation on property in the first year of use, rather than depreciating it over its useful life. Obviously only germane to the extent that you will include computers and other property and their related depreciation in your expenses. I know there is a limit, though, but I don't know what it is up to. I'm sure someone will mention it. If I remember correctly, Colin had said that rules for reporting were still being written, so the issue of where to report the trades might still be up in the air. But I think the expenses do indeed go on the Sched. C, with no income showing, thus showing a loss on the Sched. C. I'm sure I'll be corrected if I am wrong, which I probably am.<g> Mark to market doesn't change where the trades might eventually be reported, I don't think. It just means you report all of your unrealized gains and losses as of 12/31. And yes, I think it turns capital losses into ordinary losses, thus bypassing the $3000 yearly limit.(I guess if you have much of those, trading might not be for you). <ggg> I also think they all agreed that a trader would not be liable for SE tax. Hope this helps, and please be a little patient. These guys are giving freely of their time, and have lives to live and businesses to run. Good luck Len

To: RookieTrader who wrote (461)	8/21/1998 9:39:00 AM
From: Colin Cody	Read Replies (1) \| Respond to of 1383

Sec 179 is a Code Sec that a Trade or Business may elect to use, annually to write off assets all at once. . SE Tax is on the EARNED income of a Trade or Business. . Your other questions have to do with the actual nuts and bolts of assemblying tax forms. The tax preparer will do that on the trader's behalf. I would NOT suggest that a Serious Trader ever do his own tax return whether he is electing 179, 475 or doing neither. It is a sure road to a failed audit down the road. . As you know 99.9% of the population, 99.9% of the Professional Tax Prep field and even 99.9 of the IRS Agents, have a mindset that there are only INVESTORS, and Investor rules are understood by many, they are in your newspapers, tax prep books, T.V. shows etc. . Get Tesser's Book on Traders for a good overview on your pre-Sec 475 Income Tax options! Tesser is available on-line at barnesandnoble.com