FAQ'S
Answers and Advice for Day Trading and Entity Structuring
We offer advice as it relates to structuring an entity for your trading business to maximize your tax efficiency. Every day trader is unique, thus one tax strategy may not be practical for every trader. Find answers to your questions about business structuring and possible tax benefits and reductions.
I live outside the United States; do you have an international representative to help me?
Our expertise is with US tax law. We are not knowledgeable with the tax laws in other countries.
Will the Medical Reimbursement Plan work with an LLC?
No, it only works well with a C-Corporation and requires the proper documentation in the corporate records.
I trade FOREX, do I need to worry about wash sales?
Generally, wash sales do not apply to FOREX transactions.
Should I elect Mark to Market?
Mark to Market is an accounting election that will benefit certain traders; however, it is not beneficial for all traders to elect. You should work with your accountant to ascertain whether it will be tax efficient for you.
I read somewhere that you should trade in a single member LLC, but I see that you advise against it. Who do I believe?
If you do business in a Single Member Limited Liability Companies (SMLLC) the business becomes a disregarded entity in the eyes of the IRS. When that happens you are trading as a 'trader in securities', as far as the IRS is concerned. In order to qualify as a 'trader in securities' you must meet the requirements of IRS Publication 550.
Contrary to this, when you set up an entity to trade in you are setting up a business. When the IRS treats you as a business, there are many practical tax strategies and benefits that provide you with more cash flow to trade with.
Should I be trading in a C-Corporation? How can I get started?
To get started we recommend that you fill out the confidential questionnaire, so we can make a correct recommendation. When you send in your questionnaire we will schedule you a complimentary 30 minute consultation and tailor a plan to you and your trading style. We will also send you a booklet on the different types of entities, so you will understand why our recommendations make sense for you.
I set up an entity three years ago, and have used it to trade. However, I have not kept up with the other corporate compliance and documentation. Is it important that I go back now and get that done?
If you are ever audited or sued, and your documentation is not up to date or missing, the IRS can disregard your entity. This could cause some hardships for you and your family. If you need help in getting the documentation done, call us we can give you a hand.
I've heard that I could take a loan out from my self directed 401K and do anything I want with the money. I could use some more money to help me through the trading learning curve. Is this correct and how is it done?
Call one of our agents; they will explain it to you. A 401K is a terrific thing to have in your trading business. You can borrow money from, or contribute money to, the 401k ; contributions to your 401k can be a tax reduction strategy.
Advice and practical strategies can be discussed with one of our qualified agents. You may have more questions about creating an entity for your trading activities, such as tax status uncertainty, tax reduction service inquiries - or how to know if you meet the IRS guidelines of a "trader in Securities".
