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trade matching rules
       
updated 3/24/12
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Planning, Review & Preparation 1/29/13

Electing Mark-to-Market? updated 6/12/12

Trading through an entity? updated 7/4/13

Trader definitions?
updated 3/23/14

Tax information & news updated 1/18/14

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& other info


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News items:

Free money (guaranteed until 12/6/2012):
$25+ for Traders' pre-2007 monitors


Day Trading buying power limited
with ETF's effective 12/1/09 - p. 4


IRS targets taxpayers

IRS does not  fully understand the
business model for traders - p.67


Internet taxes are almost here

IRS rules sloppy bookkeeping

IRS now auditing S-corporations
as part of a tax evasion study


IRS Notice 2008-1 re: S-corp. owners (PDF)

IRS is not charging interest

IRS sued for civil rights violations

Officials agree - Richard Ney
was correct


Social Security statement online


IRS Refund information:
Where's My Refund?



Free money:
Where's my unclaimed property?




IRS Historical Documents relating
to Alphonse (Al) Capone



Ameritrade Apex accounts
have built-in GainsKeeper
®
 trade matching for free.
Separate Wash Sale and
Mark-to-Market reports included.

Note: Effective January 2011
TD Ameritrade retirement accounts
are allowed to be designated as
margin accounts without the need
to form a separate LLC to hold the
title to the account.

Other brokers offering
GainsKeeper (some charge a fee):
Scottrade
ShareBuilder
AB Watley
ChoiceTrade, as of 3/1/2005
IB Interactive Brokers, as of 3/22/2005
MB Trading, as of 3/22/2005
OptionsXpress, as of 2/21/2006
Zecco Trading , as of 6/4/2007
Firstrade, as of 2/5/2009
New trade matching rules starting in 2011

Zero commission trading:
Zecco Trading - 10/month



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please note that this is prominently
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  Copyright© 2014 Colin M. Cody, CPA and TraderStatus.com, LLC, All Rights Reserved.
 
Trading and U.S. tax policy quotes...

Latest figures from the IRS, for tax year 2012.
Top 1% of taxpayers reported at least $434,682 of AGI and they paid 38.1% of all federal income taxes
Top 5% of taxpayers reported at least $175,817 of AGI and they paid 58.9% of all federal income taxes
Top 10% of taxpayers reported at least $125,195 of AGI and they paid 70.2% of all federal income taxes 
The bottom 50% of taxpayers paid 2.8% of all federal income taxes    - Kiplinger's Tax Letter (12/19/14)



Looking for tax deductions?

Short-term trading is fast... exciting... profitable... challenging... and tax deductible!

When you tally up your results each year - do you see the capital gain tax taking away too much from your hard won trading profits? As an active trader do you find that you have too little time at the end of the day to do the necessary tax planning to avoid paying excessive income taxes? What is the real story behind all the talk about the tax benefits from choosing trader status and electing mark to market?

When is a CPA firm needed?

Serving Traders for over 20 years!        We'd Like to hear from you

Here at TraderStatus.com we will bring together in one place the information necessary to help you survive unnecessarily high short-term capital gain taxes, self-employment taxes and state and federal income taxes. To accomplish this, often a separate trading entity is the answer, but just as often we avoid it as not being cost effective in a particular situation.

Many traders do not yet even realize that they are paying far too much to the Federal Government. Existing, proven legal procedures, which in many cases can significantly reduce taxes each and every year, are available to anyone qualified to elect to use them.

As we all eventually learn, those low capital gain tax rates of 15% or lower are not available for the daytrader's lightning fast trading profits. Rather, an individual daytrader's gains (or losses) are subject to the higher ordinary income tax rates!

 

Investors and securities traders may incur substantial costs with on-line fees, commissions, real-time data-feeds, computer equipment and so on. The Internal Revenue Service, on their own, do not treat most taxpayers very fairly when it comes to deducting these expenses. Leaving it up to the IRS publications and instructions, at best, a taxpayer must first qualify to itemize his deductions on Schedule A - making those deductions subject to a 2% of Adjusted Gross Income (AGI) reduction and for some high-income taxpayers even an additional 3% of AGI reduction.

Please take the time to read and understand the information found on our web site and also on the
Discussion Board as it can be very helpful to you when preparing your taxes and when planning your tax strategies.  Every month we hear from taxpayers who found this web site too late or after they already paid someone for a download that contained nothing more than the basic information here available to you for free.  Taxpayers who were ill-advised by normally very competent CPAs and other tax practitioners, but for whom the tricks and traps  of Trader Status were unknown to them.

A good CPA does not need to know everything, he only needs to know where to look it up when a problem arises, or when he's doing your tax planning.  Unfortunately the hard facts are that, when it comes to traders in securities and traders in commodities, many tax advisors have no clue that there even is a Trader Status issue to look up, let alone having the practical hands-on experience necessary to be aware of the tricks and traps to be found!


Proposed IRS Regulation 1.1411-5 targets gains from securities traders, futures traders and forex traders for imposition of the 3.8% surtax. IRC §1411 - November 30, 2012

Odds of being audited:
1:8 taxpayer earning over $1MM were audited in the past year.  1:25 are the odds for individuals earning greater than $200,000.   1:100 for people earning less than $200,000.  1.6MM tax returns were audited, out of 141MM form 1040 returns filed.  8 out of every 10 audits resulted in additional taxes being assessed.  Corporations: 1:100 odds for those with assets under $10MM. -  derived from IRS announcement, January 5, 2012

For 2014 as has been the case starting with 2011, taxpayers with any financial account maintained by a foreign financial institution or any securities issued by someone that is not a U.S. person may be required to file IRS Form 8938 along with their regular income tax forms. Taxpayers are subject to a $10,000 late filing penalty and the burden of compliance for some European institutions is too expensive and will result in closing accounts held by U.S. citizens. -  derived from IRS announcements, January 2012






                   


                   


 

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Help is out there for those qualifying taxpayers whom are active enough to file with the IRS as a TraderStatus
Taxpayer. Under Trader Status an electing daytrader may deduct all of his ordinary and necessary expenses. And for taxpayers filing under Trader Status they do not itemize those expenses on Schedule A (but yes, they may even take the "standard deduction" in addition to all their "trader status" expense deductions). Since a trader does not "itemize" daytrading expenses these are not subject to the 2% limitation, the 3% limitation, or many of several other restrictions the IRS places on the average investor!



Want to learn more about using TraderStatus on your tax return? 
You've come to the right place! 
Come inside and look around where you'll find:


A basic overview accurately describing the law pertaining to Traders, Investors and Dealers and the Mark-to-Market election.

Order form to receive additional more detailed TraderStatus information which can be invaluable when doing your own tax return, or for providing the information necessary to defend yourself during an Internal Revenue Service Tax Audit.

Educational (and therefore tax deductible) Trader Books and Audio Tapes.

Stock trading spreadsheet for manually keeping track of your trading on a day-to-day basis.

Instructions to retain Professional CPA support for a personal one-on-one telephone & email consultation to discuss your own unique tax situation.

Retainer payment form for:  Tax Return Preparation; Mark-to-Market election preparation; Correcting prior errors made when traders fail to file the required IRS elections properly & timely; Using the correct forms, and applying the current appropriate tax favored theories as they apply to you on your own tax return;  or for Representing you in front of the IRS if you're being examined under field audit or mail inquiry.


Much more in tax counseling and tax planning strategies is available starting on our order page, from the TradersTaxPlan  to a full service engagement. Techniques as sophisticated as you need them to be will be custom designed for securities trader and commodities trader clients.



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Last updated: December 20, 2014

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