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dc10
stranger

Reged: 02/17/07
Posts: 2
SMLLC RFC q
      #627 - 02/17/07 07:54 PM
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First off, just read your book. Best money I've ever spent. Really thorough and informative. Answered a lot of my questions. I'm thinking of starting a SMLLC for my regulated future contracts trading. I was/still thinking of just being a sole prop w.o mtm 475 due to the 60/40 gains and no SE tax. However, I understand that you can't have a retirement account or write off health insurance costs. If I were to setup a SMLLC my earnings would be subject to SE tax right? And would I not be able to use 60/40 either? I just am not sure whether being able to have a retirement account/ health insurance writeoffs justify the SE tax and possibly the loss of 60/40 on gains.

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dc10
stranger

Reged: 02/17/07
Posts: 2
Re: SMLLC RFC q new
      #630 - 02/23/07 08:46 PM
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any help here?

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GreenGTTCPAAdministrator
CPA & CEO
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Reged: 10/31/03
Posts: 275
Re: SMLLC RFC q new
      #632 - 02/25/07 10:45 AM
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Thanks. You can retain 60/40 by not electing IRC 475 MTM. As a SMLLC, you have 2 schedule Cs; one for trading expenses and the other for your administration fee paid by the 1st Sch C. Only the administration fee is earned income subject to SE tax and the rest of your trading gains are exempt from SE tax (unless you are an exchange member).

We prefer the multi member LLC which uses a guaranteed payment, as the 2 Sch C strategy can be challenged by the IRS as a disregarded entity. It works, but the partnership return approach (multi member LLC) is safer.

Consider a consultation to discuss this all and deploy the strategies if you have more questions.

--------------------
Robert A. Green, CPA & CEO
GreenTraderTax.com

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