June 30, 2010 Podcast
Click here for mp3 file (streams quickly).

Opening remarks from Green on Fin Reg and tax changes.

Gillett discusses a developing secondary market for investors selling hedge-fund investments that are otherwise “gated” or locked. During the market crisis, some managers put up gates to prevent investors from executing redemptions.

Commentary from Green on the latest developments of a potential financial-transaction tax and other bank fees/taxes in the U.S., EU, Eurozone and G-20.

Green and Gillett discuss a new idea: Using single-purpose LLCs with investors or prop traders to reduce regulatory compliance challenges and costs and improve tax efficiency.

With a typically managed account, the trader can’t deliver trader tax status business benefits to the investor, so the investor often times has trouble deducting investment fees paid to the manager. Conversely, with a hedge-fund structure (LLC or LP), the manager can deliver trader tax status breaks to the investor, plus get carried-interest tax breaks – a share in long-term capital gains and no generation of self-employment (SE) taxes. Why not convert a large managed account into a special-purpose LLC to solve these tax problems? We discuss how.

The special-purpose LLC can also help solve some brewing troubles in the prop trading industry. First, read Green’s blog on FINRA’s Regulatory Notice 10-18, which advises clearing firms to spot beneficial owners, perhaps disguised retail customers. To solve these concerns, you can put good prop traders into their own special-purpose LLC with the manager and main funder of the trading.

The manager/funder can put up all the money and/or the prop trader can contribute some capital too. It’s not deemed a deposit and looks good as true capital. Profit and loss sharing can be as desired, but figure it’s 80 percent to the prop trader and 20 percent to the manager. This strategy seems to do away with the deposit problem and it also may solve the “kill what you eat” profit-sharing problem too. It’s more tax and regulatory efficient.

Medical expense reimbursement plans (MRPs). Fringe benefit plans only work with C-corps or sole props/SMLLCs. They don’t work with pass-through entities, even with a salary, unless neither spouse owns more than 2 percent of equity.

Most traders don’t need an MRP, but a few may benefit from one. We can help you assess the situation and set up the plan too. Be careful to avoid other tax firms harping on the benefits of these plans in order to sell two entities to start with. Unless you have trader tax status, the MRP and other tax breaks won’t work as designed.

It may be best to use a Schedule C and not even bother with two entities like the C-corp/pass-through entity combination. The two entities are more cumbersome and harder to defend the purpose of the employee in the C-corp, especially with trading losses. You need strong trader status that can stand up to IRS exam. It also only works when the spouse is actually performing services.

Miscellaneous Q&A.

June 23, 2010 Podcast
Click here for mp3 file (streams quickly).
Cick here for invitation with details on topics to be covered.

June 17, 2010 Podcast
mp3 version (streams quickly).

June 10, 2010 Podcast
mp3 version (streams quickly).

Commentary from Robert A. Green, CPA on financial regulation in the U.S. and G-20, carried-interest repeal, new health care taxes on investment income and overall tax change legislation. Green points out how IRS Section 482 "transfer pricing" rules, intended to increase taxes, have actually reduced tax revenues and have increased (rather than reduced) the outsourcing of jobs and value to foreign countries with lower tax rates like China and Ireland. The latest on the financial-transaction tax threat from Europe and other commentary on the Euro fiscal and monetary issues.

Throughout this podcast, Green discusses the overall theme for tax-change legislation: How the agenda has changed from Bush's ideology for lower taxes on the investor class to Obama's ideology for reversing course; and expanding taxes on the investor class, investment managers, banks, the rich and global corporations, while trying to not raise taxes on the middle class. Green explains the theory, logic and history behind tax-change legislation.

Discussion from Brent Gillett, JD on financial regulation provisions affecting hedge funds. It includes an important change to the accredited investor standards; the $1 million net worth standard may no longer include a primary residence. Thankfully, the angel investor amendment passed. This amendment negates an SEC attempt to block power over smaller funds using the Reg D private placement route (discussed two weeks ago on our podcast).

Green discusses the pending repeal of carried interest covered on our blog recently. A final watered down 65/35 (ordinary income/carried interest) split is not unreasonable and resembles 60/40 on futures traders.

Q&A on a variety of topics:
How will the carried-interest repeal work? How did this controversy arise?
How will the S-corp SE tax loophole repeal work? Will it affect retail traders too?
How will the Medicare tax on investment income work in 2013 under the health care bill? Will it capture all types of income?
We discuss how traders can utilize retirement plans in creative ways.
Do you have to file a foreign bank account form for a U.S. forex trading account migrated to a UK platform?
Trading in retirement plans to avoid new investment taxes.
Several other good Q&A.

June 3 , 2010 Podcast
mp3 version (streams quickly).

Entire session was Q&A with Robert A. Green.
We covered:
Roth IRA conversion strategies
Bush tax cuts expiring and tax increase fights coming
Repeal of carried interest and S-corp SE tax loopholes
Is 60/40 treatment safe for traders?
Forex taxation, brokers, leverage and regulations in the U.S. vs. abroad
Section 475 and using MTM
NOL rules and strategies
Futures rules and carryback strategies
Suspending a trading business while taking a job
Balancing a job and trading at the same time
The controversy around high-speed trading
And more.

May 27, 2010 Podcast
mp3 file (streams quickly).

Robert Green and Brent Gillett discuss: financial reform focusing on potentially serious changes threatening hedge fund business plans; and repeal of carried interest; repeal of S-corp SE tax breaks and other tax changes. They answer several questions on entities, forex, Roth IRAs, and more. Commentary from Green including the latest on a potential FTT effort in Europe.

April 1 , 2010 Podcast
Windows Media Player file (31 MB 75:00 length)


Highlighted Recent Recordings:

*Entities & Employee-Benefit Plans
*Current Developments in Tax Law that Affect Traders
*Accounting for Traders
*The Section 1256 club is hard to get into: Futures on foreign exchanges often donít qualify
*Puerto Ricoís tax haven status
*Entities: A key update on trading entities and management companies
* 2013 Tax Filings For Traders & 2014 Tax Planning
*Forex Tax Treatment & Planning
*Trader Tax Law Update: Current Developments
*2014 Tax Planning & Will an Entity Help Lower Your Tax Bill?
*Audits of Performance Records

Trader Tax Center

Tax Newsletter & Calculators

Highlights (see the full archive):

Aug 19: Foreign partners in a U.S. trading partnership can be tax free Read More

Aug 13: IRS warns Section 475 traders Read More

June 20: Tax treatment for Nadex binary options Read More

June 19: IRS softens its stance for some taxpayers with undeclared offshore accounts Read More

June 12: IRA rollover rule changes Read More

June 6: Bitcoin is not reported on 2013 FBARs Read More

June 5: Tax deadlines in June: U.S. residents abroad and FBAR Read More

June 2: Tax treatment for foreign futures Read More

May 21: Bitcoin tax update: Can business traders apply Section 475 elections to bitcoin trades? Read More

May 13: Puerto Ricoís tax haven status is tailor made for investors, traders and investment managers Read More

May 6: Entities: A key update on trading entities and management companies Read More

Mar 25: IRS guidance on bitcoin transactions will chill its use Read More

Feb 27: Another trader tax court loss (Assaderaghi) Read More

Feb 1: Net investment tax details Read More

Dec 4: IRS final regulations for Net Investment Tax help traders. Read More

Dec 3: Bitcoin is a hot commodity, but is it taxed like commodities, assets, or currencies? Read More

Nov 15: Another non-business trader gets busted in tax court trying to cheat the IRS. Read More

Nov 6: Hedge fund investors depend on ďassuranceĒ from quality independent CPA firms. Read More

Oct 29: ObamaCare taxes are starting to affect traders. Read More

Aug 30: The Tax Court Was Right To Deny Endicott Trader Tax Status Read More

Aug 18: Common trader tax mistakes Read More

July 24: Learn the DOs and DONíTs of using IRAs and other retirement plans in trading activities and alternative investments Read More

GreenTrader blog archive, Forbes blog, Benzinga blog.


Bookmark and Share

Join our Email List to receive
our content and event invitations

education  |  traders  |  investment management  |  traders association  |  about us  |  blog
home  |  store  |  login  |  sitemap  |  contact us
Send mail to with questions or comments about this web site or click here
Copyright © 1996- Green & Company, Inc.   disclaimer  |  privacy