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Registered User
Joined: 12/31/2005
Posts: 266
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anybody declaring trading as a businees on thier taxes?
i am considering declaring trading a business on my 2009 tax returns, since i do live off investment income(interest, dividends) and trading income, am not employed. i probably make 50-75 trades roundtrip a year. hopefully this enough.
am i correct in assuming this can be done by simply:
using form 1040, schedule D and schedule C(profit and loss from a business)?
and also make a request to the irs to use mark to market accounting. although, i ve probably missed the deadline since this must be done a year in advance of the filing deadline. therefore, should i have a yearly trading loss of more than $3000 beyond business expenses, i would only be able to declare a max $3000 loss?
and the main advantage appears to be able to write off business expenses(housing, utility bills, software, computers) which can very easily amount to $5000 annually. so your first 5000 or so in profit is tax free?
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Registered User
Joined: 3/21/2009
Posts: 8
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Pretty sure you will need much, much more than 75 trades a year to qualify, at least for mark to market. With schedule D I'm not sure. I read a detailed article somewhere that stated the IRS is so picky on this matter that if you have more than a few days of not trading they consider it not a real business. In otherwords you could sit and study and watch markets 24x7 but if you don't trade most every day literally they will flag you. And if you declare mark to market pretty sure you can never change it back so be careful.
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Registered User
Joined: 12/18/2008
Posts: 150
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to trade as a business you have to have a single account of more than 25k in it and trade more than that 5 day trades per week.
the losses can be unlimited.. so if you have a 50000 loss, you can write off the whole thing
as far as write offs, you cant wrte off your mortgage/utilities. however you can write off the portion of your house which is your home office
also you need to file a k-1
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Registered User
Joined: 12/31/2005
Posts: 266
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ya, activity is the tricky part. i'm sure about mark to market, and i've never lost $3000 in a year. and have no intentions of starting.
i'm sure if i call the irs and ask, they'll have no idea.
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Registered User
Joined: 12/18/2008
Posts: 150
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another thing is depending onyour state, you may not be able tin incorporate for trading purposes
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Registered User
Joined: 7/1/2008
Posts: 889
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whenever you write off part of your home for business purposes, prepare to be audited. You will be. It's pretty much an automatic flag.
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