Traders >> Trader Tax Status
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Reged: 10/10/09
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Any chance of filing as Trader for 2009?
      #714 - 10/10/09 02:13 PM
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In 2008, I made around 70K in taxable income from trading. The trades were mostly "swing trades" (held for a few days), although some were held longer than that. I made around 121 transactions in 2008. Based on my success in 2008, I got the idea that trading is something I would eventually be able to make a living at it, and my intention was to continue trading and eventually discontinue my computer consulting business.

I still have the computer software consulting business, and work at home, and I file a Schedule C for that business. However, I have actually been spending more of my time focusing on trading. It is like a second full time job, except that I lost money this year. My problem, is that I lost a large some of money (over 100K) in 2009 as a result of attempting to trade index futures, which I had never traded prior to 2009. I have been trading futures virtually every day and have racked up 10K in commissions alone. I've made hundreds and hundreds of futures trades in 2009, if not thousands. I am still continuing with the trading, and my goal is to eventually being profitable in my futures trading.

My state (NJ) does not allow a capital loss to be taken beyond any gains to offset that loss, and any remaining loss can not be carried forward. If my loss is not recovered by year end, and I were to file as a non-trader, then even if I eventually were to make back my 2009 loss over time, my state is expected to tax me around 8K on those earnings (even though those earnings, in my mind, would merely be a recovery of my 2009 losses).

I am wondering if I would be allowed to file as a trader for 2009 and be able to deduct my losses against ordinary income, and still be able to carry forward the remainder of the loss for both State (NJ) and Federal? Does my having a net loss from trading in 2009, and my having other sources of income prevent me from filing as a trader, even though I have been trading full-time in terms of the time I have been devoting to it?

Am I allowed to file as a trader for 2009 or not?



Edited by JReality (10/10/09 02:15 PM)

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