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EDUCATION CENTER
IN THE MEDIA: BUSINESS WEEK

"Are You a Pro?"
The Tax Guide for Traders can help you figure out if you qualify as a professional trader

Carol Vinzant, Editor
AUGUST 31, 2004

Frequent traders spend all kinds of time and energy figuring out how to make money on lots of little trades. If enough time is not devoted to figuring out the complex taxes involved, they could blow much of their profit. Robert A. Green, a Manhattan accountant who has built a practice specializing in trader tax law, has put all he has learned into a new book, The Tax Guide for Traders, published by The McGraw-Hill Companies (which also owns BusinessWeek Online).

Green gives the kind of advice that accountants less familiar with the world of trading might not offer. For example, he encourages all traders to see if they'll qualify for professional trader tax status, even if they don't end up taking all of the benefits. "Gaining trader tax status is beneficial in all circumstances," he writes.

KEY QUESTIONS. The tricky thing about gaining trader status, Green explains, is that most of the rules were written before online trading really took off. They reflect a black-and-white view of professionals vs. amateurs that doesn't necessarily hold anymore.

Because of the ambiguity, Green suggest traders ask themselves a number of questions before defining their status: Do they seek to take advantage of daily moves in the market? Is their activity substantial? Do they only hold stocks for a short time?

The benefits of professional status include the ability to write off a greater number of trading-related expenses and a reduction in paperwork, Green points out.

The rest of the book contains technical information on commodities, audits, extension, and other issues that might be of greater interest to accountants than to traders. However, the discussion of who qualifies as a trader will make the book worthwhile for those who aren't accountants.

The Tax Guide for Traders
The McGraw-Hill Companies
October, 2004
$55

A Tax Rule That Can Bring You Joy
By using "marked-to-market" accounting, active investors can shield more profits and simplify their returns. Catches? You bet

By Carol Vinzant
APRIL 8, 2004

Active traders have until Apr. 15 to tell the IRS that they want to use the "marked-to-market" method for accounting for their 2004 gains and losses -- an approach that, if they qualify, will let them shield more of their profits from taxes.

The alternative is to get stuck with a default method, called cash accounting -- the one that most individual taxpayers use, whether they realize it or not. Cash accounting limits the net capital loss from trading that you can claim each year to $3,000...

Tax Planning for Net Investment Income (May 9)

Highlighted Recent Recordings:
*A Trading Business Entity Is Better Than A Sole Proprietorship
*Trader Tax Benefits & Elections To Make By April 15
* 2013 Trader Tax Law: What You Need to Know NOW
*2012 Tax Extensions & Section 475 MTM Elections
*2012 Trader Tax Preparation Examples & Tips
*Active Forex Traders Benefit From Trader Tax Status
*Tax Benefits from Trading Section 1256 Contracts
*How Traders Deduct Education
*Updates: Trader Tax, Form 8949 vs. 1099-B problems, & Forex
*Taxes for Options Traders
*Best Entities for Traders and Investment Management
*Launching an Incubator Hedge Fund

Trader Tax

Tax Tools

Highlights:

May 5: Petition on RallyCongress.com for the Net Investment Tax Read More

May 1: The IRS needs to fix their proposed regulations for the Net Investment Tax Read More

March 31: PFG investors can deduct theft losses on 2012 tax returns with Rev. Proc. 2009-20 safe harbor relief. That’s great news! Read More

March 20: Extensions & Section 475 MTM elections are due by April 15 Read More

March 7: MF Global & PFG Best deposit losses have nuanced tax treatment Read More

March 5: Caution, downloading securities Form 1099-Bs into TurboTax often leads to incorrect tax filings Read More

Feb. 5: Green’s 2013 Trader Tax Guide is our best ever Read More

Jan. 5: Post fiscal cliff tax planning for traders Read More

Dec. 7: New entities effective Jan. 1, 2013 reap many tax benefits Read More

Dec. 4: Investors in hedge funds depend on “assurance” from quality independent CPA firms Read More

Nov. 20: Cost-Basis Reporting Problems and Solutions Read More

Sept 5: High-income traders and ObamaCare’s 3.8% Medicare tax Read More

Aug 22: Proprietary trading Read More

Jun 20: The Best Entities for Traders and Investment Management Businesses Read More

Jun 20: Tax Benefits from Trading Futures & Other Section 1256 Contracts Read more

GreenTrader blog archive, Forbes blog, Benzinga blog.

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