EDUCATION CENTER
INTERACTIVE: FREE CONFERENCE CALLS & PODCASTS

Although these sessions are free, informal and often comprised of questions and answers, they are valuable. Ask your questions on the conference call, or by email to info@greencompany.com. Sorry, recordings prior to Oct. 30, 2008 are not available.

Thursdays Conference Calls and/or Webinars, 4:15 - 5:30 pm ET.
Podcast recordings available below.

Join our email list to receive an invitation. Go to the Join Us dialog box on the bottom of this Web page to input your confidential email address. We usually send email invitations a day or two before the events.

Conference Call: Dial 312-878-0224, Access Code: 603-682-315

Hosts: Robert A. Green, CPA/CEO of GreenTraderTax and GreenTraderFunds and Brent Gillett, JD of Investment Law Group of Gillett Walker, LLP.

Special Topics: Vary per week and usually are focused on our current blog articles. They are also included in our weekly bulk email invitations, so make sure to get your invitation by joining our confidential email list below.

General Topics:

• Trader Tax, and Forex Tax;
• Retirement Plan Strategies & Entities for Traders;
• Investment Management Businesses (Financial Regulation and more);
• News of the Week (tax and regulatory);
• Tax Changes Coming in 2010 and Beyond (see blog and videos below);
• Year-End Tax Planning;
• Hedge Funds, Incubator Funds, and Registration issues;
• Proprietary Trading Firms;
• and Green Energy Active Investors.

Podcast Recordings Available (click links below)
Links to our recent conference calls are included below. You can also stream the podcasts on our Facebook page.

July 29, 2010 Podcast
Click here for Windows Media Player file (approx. 32MB, 75:00 length).
Click here for mp3 file (larger file, but it streams quickly).

Q&A format and no commentary.

We covered forex tax treatment and elections, proposed rules to reduce forex leverage to 10:1, trader tax status and business treatment, IRA conversions and trading in retirement plans, Section 475 MTM elections, dealer versus trader status, and more.

July 22, 2010 Podcast
Click here for Windows Media Player file (approx. 29MB, approx 77:00 length).
Click here for mp3 file (larger file, but it streams quickly).
The sound is a little better on the Windows Media Player file.

00:00 – 05:30: Fin Reg changes for hedge funds.
Fin Reg bill includes changes for hedge funds and investment-management businesses. The accredited investor rule is changed to disallow a primary residence in the $1 million net worth standard and this change takes effect on date of passage (July 21, 2010). Existing investors are not affected unless they add capital like a new investor. The bill closes the biggest loophole to registration: the “private adviser” exemption. Managers are given one year to register. Generally, the Financial Bill requires all investment advisers to hedge funds and/or private equity funds that manage $150 million or more in assets to register with the SEC. Form ADVs need plain English going forward too.

05:30 – 08:10: Fin Reg makes it clear that swaps don't qualify for 60/40 tax treatment.
Fin Reg calls for derivates contracts to be cleared on futures exchanges, but Congress doesn’t change their tax treatment to lower 60/40 tax rates. Fin Reg moves many derivative contractors from the private marketplace to clearing on futures exchanges. In Section 1601 of the bill, Congress makes it crystal clear this movement isn't like trading and it doesn't afford these derivatives contracts the regulated futures contract tax treatment in Section 1256. See Green’s blog on this topic.

08:20 – 17:25: Tax changes coming.
Question on the Jobless Bill passage. Wasn’t the S-Corp SE tax dropped from the bill and could it come back? Green answers: The S-Corp SE tax loophole repeal was dropped from the bill but it could come back in a proposal soon.

Green discusses recent tax-change negotiations and intrigue in Congress and he gives his opinion on how these changes may work out for taxpayers. Green discusses the Bush tax cuts expiring, proposed bank taxes, proposed carried-interest repeal, the end of cap and tax, and more. The maneuvering is intense and Green thinks gridlock will happen and Bush tax cuts may go up for everyone, not just the rich. Commentary from Green about the tax-class wars and private vs. government benefits and the need for government benefit cuts.

17:25 – 20:45: Fin Reg’s affect on taxes.
Question: Does Fin Reg affect forex taxes? Green answers no and explains that Fin Reg is not a tax bill but it does pass on wind-down costs to the big-banks in the form of bank taxes or levies.

20:45 – 23:52: Beefed-up 1099 reporting in the health-care bill goes too far.
Green explains there were complaints from gold coin dealers this week about the new draconian 1099 reporting rules which are included in the health-care bill. Green says the government has gone too far in distrusting small business with this type of “catch-the-cheat” 1099 reporting and other regulations. 1099 reporting is a burden to business, and it’s expensive and time-consuming. Green finds this trend troubling.

23:52 – 27:45: Fin Reg also goes too far and it’s going to be counter-productive.
Why were Fannie and Freddie left out of Fin Reg reform and why are government managers who missed the last crisis being rewarded with this reform? Green discusses several of the points in his blog article from July 21, 2010.

27:45 – 30:45: Update on forex leverage rules and how Fin Reg fits in.
Any news on the CFTC proposals to reduce leverage on forex trading from 100:1 to 10:1? No conclusion to the proposals yet. Green is guessing that many proposals were put on the back-burner waiting will be sorted out now that Fin Reg has passed. It will take some time.

30:45 – 38:00: Will regulators water-down Fin Reg in codifying the bill?
Brent Gillett JD discusses the new rules for hedge funds and prop trading and how regulators may water-down some of the draconian language. Green discusses how Fin Reg has a long phase-in period for the Volcker rule and how Congress may back-track on hampering U.S. banks in competition against universal-banking in Europe and Asia – where they will not adopt similar rules.

Green gives more commentary about the problems with Fin Reg, the mirage of “too big to fail," how Fin Reg can actually cause a run on the bank and contagion and more.

38:00 – 43:36: Fin Reg changes to the accredited investor rules.
Gillett discusses how the accredited investor changes will change over time and if it will slow down the hedge-fund industry. Gillett discusses accredited investors vs. non-accredited investors and more. Brokers have a fiduciary duty now and they often sell hedge-fund investments too.

Managers need to contact their legal counsel immediately to change their documents for the new accredited investor rules, which apply from day one. They also need to start planning for registration by July 21, 2011.

State registration rules for investment managers and funds are changing fast too. Will states adopt some of Fin Reg changes?

43: 40 – 50:00: Government mistakes or trial and error?
Caller comments on government mistakes like repealing Glass-Steagall and Fannie and Freddie. Green gives commentary and suggests smaller trial-and-error rather than major reform agendas.

50:00 – 58:50: Proprietary trading firm update.
Question: What is the proper way to join a prop trading firm? Green comments about the industry and discusses his recent blog article updates on the subject. Prop trading is a growth industry around the world and prop traders are leaving U.S. banks to join these firms.

58:50 – 1:01:25: The legal risks in joining a prop trading firm.
Brent Gillett JD discusses the legal side. Green gives an update on problems and alerts to the industry.

1:01:27 – 1:05:15: Small hedge-fund registrations after Fin Reg?
Question: Do small hedge funds need to register in Fin Reg? Gillett answers and gives an overview of registration on the federal vs. state level. It can vary greatly by state. Gillett discusses the rules in GA and other states too.

1:05:16: Will states get more aggressive after Fin Reg too?
Gillett answers. More states are moving away from the de minimus rule. Many states are in a period of flux and they could become more aggressive in their interpretations of SEC rules including Fin Reg. Managers should receive advanced notice. Gillett talks about Colorado and other states.

Green wonders about state budgets, requests for user fees and more. Gillett thinks it's reasonable and not a big worry yet. Green thinks states could get tough and seek user fees and taxes from hedge fund managers. That seems to be a negative trend.

National vs. state rules are always a concern for businesses. Blue-sky state law is very important in hedge funds and Gillett is very experienced in this area.

July 15, 2010 Podcast
Click here for Windows Media Player file (approx. 17MB, approx 50:00 length).
Click here for mp3 file (larger file, but it streams quickly).

Green discusses passage of the Fin Reg bill today and how investment managers, traders and bankers should navigate and live with the new rules. There is more regulation for hedge funds which means more compliance costs, transparency and oversight. Due to even more restrictions at banks – limiting hedge funds to 3 percent of capital – there are also more opportunities for hedge-fund entrepreneurs to expand. Hedge funds escaped many bank fees/taxes in the last minute of Fin Reg deal making, including increased FDIC levies (which only apply to FDIC banks).

Hedge funds. The following are excerpts from Bloomberg and Green discussed these points with his own take on things.

• Any firm with $150 million or more in assets must register under the new rules. Larger hedge funds can’t use prior exemptions to avoid registration. Registration subjects funds to periodic inspections by SEC examiners. Funds also must hire a chief compliance officer and set up policies to avoid conflicts of interest. Hedge and private-equity funds will be required to report information to the SEC about their trades and portfolios that is “necessary for the purpose of assessing systemic risk posed by a private fund.”
  
  
• Registration rules may cost hedge funds as much as $500 million in the first year. The estimate is based on 2,000 new registrants and reflects the cost of implementing necessary compliance procedures. That’s expensive. Should the government determine a fund has grown too large or is too risky, it would be placed under Fed supervision. Restrictions on banks’ ability to own hedge and private-equity funds and trade for their own accounts may benefit the funds that are subject to less regulation. The bill could push new investment and trading talent toward the industry. Limits on leverage and stiffer capital requirements for banks may also give hedge and private-equity funds an edge landing investors chasing bigger returns. –Robert Schmidt.

Fin Reg’s wind-down procedures are scary in my view, as I wrote about on my blog earlier. Managers of covered institutions are subject to many risks, just like in a private partnership, except they are not partners who can control risk in that type of capacity. Fin Reg has the power to claw-back compensation and recover other losses from managers. Are bankers crazy for staying at banks with this type of personal risk? Many should leave for hedge funds.

Impact on traders: Some derivatives are moving to exchanges. Can traders enter this derivatives exchange-traded marketplace? It might be an opportunity.

Will the Bush tax cuts be extended? Green gives his take on how this may pan out.

Little Q&A.

June 30, 2010 Podcast
Click here for Windows Media Player file (approx. 30 MB, 75:00 length).
Click here for mp3 file (larger file, but it 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
Cick here for invitation with details on topics to be covered.
Click here for Windows Media Player file (approxx 30 MB, 75:00 length).
Click here for mp3 file (larger file, but it streams quickly).

June 17, 2010 Podcast
Windows Media Player file (28 MB, 80:00 length).
mp3 version (59 MB). Easy to stream on your smartphone. It's also easily accessed from Robert Green's facebook page.

June 10, 2010 Podcast
Windows Media Player file (31.4 MB approx. 80:00 length).
mp3 version (61.1 MB). Good sound again this week and easy to stream on your smartphone. It's also easily accessed from Robert Green's facebook page.

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
Windows Media Player file (34.1 MB 80:00+ length).
mp3 version (69.6 MB). The audio sounds much better this week.

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 (approx. 62 MB 80:00 length) should stream immediately.

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)