Specific Strategies To Grow Wealth And Protect Your Assets – Exclusively For Stock And Options Traders
No one becomes a Stock or Options trader just for the fun of it. Rather, your goal is to build wealth – perhaps to fund your retirement, or pay for your kid's college education.
Of course, no one's going to make that easy for you. As soon as you do start to build a nice little nest egg, people start coming at you with their hands out. First it's the government wanting you to pay more taxes. Next, you realize your assets are liable if you're ever involved in a lawsuit.
But there are ways to dramatically reduce both your tax burden, and your risk of losing assets if something calamitous happens. Believe it or not, how you set up your accounting can have a dramatic impact on both how much wealth you can create, and how much of it is protected from the courts and the IRS.
Discover The Ultimate Tax Shelter – The Only Way Left For The "Little Guy" To Get Rich
The Tax Court ruled against a couple's deduction of securities losses as ordinary rather than capital and against expenses as trade-or-business-related, stating the taxpayers failed to qualify as traders and were subject to the capital loss and itemized deductions treatment of investors.
William Holsinger and Joann Mickler claimed trade or business status for their stock trading to get ordinary loss treatment and deduction of their losses rather than the annual $3,000 loss limitation. They also claimed their expenditures as business expenses for determining their AGI rather than itemized deduction subject to limits.
After trading in their own accounts for some time, they created an LLC and added one brokerage account in its name. They elected IRC 475(f) mark-to-market accounting for the LLC. The couple also continued to use their original brokerage accounts and did not transfer the account registrations or taxpayer identifications.
In determining if the couple were in the trade or business of securities trading the Tax Court relied on established tests. The trading activity, measured by the regularity of trades and amount of money involved, must be substantial, and the taxpayer must try to capture swings in trading sessions. In this case the Tax Court decided the couple's trading activity was not sufficiently substantial with trades on less than 40% of the trading days in the year after the LLC was established and 45% of the trading days in the following year. The Court also found the couple did not make sufficient efforts to capture swings in the market trading sessions as a significant amount of the couple's holdings was held for more than 31 days.
“Petitioners claimed business deductions for 2001 and 2002. Petitioners argue that their trading activity was on behalf of the LLC (Alpha) and not for themselves as individuals. Petitioners claim they were Alpha's agents and therefore had the authority to conduct trades on its behalf. Even if petitioners acted on Alpha's behalf, because their activity, as we have already found, did not rise to the level of a business (the business of trading securities), the expenses petitioners attributed to that activity, even if incurred on Alpha's behalf, are not deductible as business expenses.”
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As part of our regular process of creating entities for clients Traders Accounting provides four one hour each business consulting sessions. During these sessions we walk you through all of the steps necessary to ensure your company is structured, funded, and setup correctly to provide the protection you desire and deserve. Many of the problems that people find themselves in, like the one featured in the above article, can easily be avoided when you have a professional service, like ours, working with you. We don't just provide you with "cookie cutter" -- forms, like Legal Zoom, nor do we just send you the documents and leave you to the details on your own like most of our competitors. Traders Accounting wants to go the whole distance in making sure your trading company is complete and correct every step of the process.
October 23 and 24th Live Seminar in St Louis
Traders Accounting will be presenting a seminar on October 23 and 24, 2009 in St Louis at the Options Monster Expo. The live seminar presented by Traders Accounting will cover the topic: Five Reasons 94% of Traders Fail, A Guide to Managing Your Cash Flow. Traders of all skill levels will benefit from this informative event. Validate your trading approach and learn new techniques as top market pros teach you to become a more successful trader.Are you up this year? What is your plan for 2010?
Choose workshops that narrow in on key trends, strategies, and asset classes
What are renowned market pros doing to beat the market? Ask them yourself
Using a Traders Accounting bookkeeper, you will receive quarterly financial statements based on the trading information you provide to us. Although you will receive financial statements quarterly, your bookkeeper actually reviews your account every month to keep it current with the trader tax law changes and updates that can impact your business.
Call Sara for more Information: 1-800-938-9513 x208
Traders Accounting provides this free Newsletter as a service to our clients and subscribers. The publication is sent out twice each month on average and is intended to keep Traders aware of changes to the Tax code, educational opportunities, and general news that pertains to the business of trading.
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