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

To: Nelson Chang who wrote (851)	5/8/1999 6:19:00 PM
From: m-top	Read Replies (2) \| Respond to of 1383

Nelson, I'm not sure how or what you trade but if you're a pure technician just looking for a market to trade you might want to consider S&P 500 futures. Yes they are far more risky but if you are confidant in your abilities it appears to be far better from a tax standpoint. If you don't trade based on technicals, I would not recommend trading them. I recently heard that futures are taxed at the preferrential rate of 60% long term and 40% short term regardless of trade duration. Though tax code is confusing as hell to me, my accountant has confirmed that this is indeed correct. On top of a 39.6 fed rate, state taxes in massachusetts are 12 perctnt for a combined tax of 51.6 percent. The maximum tax on futures gains would drop to about 25%. Though I am not currently a futures traded, I plan to look into it. To be able to save 50 percent on taxes its worth a shot. Colin, if you or anyone else can confirm the futures tax treatment I'd sincerely appreciate it. As far as write-offs, there don't seem to be many options. The higher you're income, the more your deductions get phased out. The best advice my accountant ever gave me was to pre-pay state taxes (assuming you don't already pay quarterly) as they are deductible on your federal taxes. That in itself can save a bundle. If you are able to come up with any innovative ways to reduce the tax hit I'd very much like to hear about them.