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Originally Posted by GreenTrader Tax
Thanks for buying my book "The Tax Guide for Traders." It covers trader tax for securities, futures, commodities and forex traders.
There are examples for forex traders in our companion "2006 GTT Guide: 2005 Tax Return Examples for Commodities, Futures & Forex/Currency Traders (Individual and Entities)" available at http://www.greencompany.com/Traders/Guides.shtml.
See updated Forex Tax content on our site at http://www.greencompany.com/Educatio...Currency.shtml
Simple Answer to your question.
If you did not elect out of IRC 988, then report your forex trading loss in summary form (the net amount) on line 21 Other Income (Loss) of Form 1040. That's the last line above Gross Income.
There is no capital loss limitation of $3,000 (from Schedule D) that applies on forex ordinary losses.
If you elected out of IRC 988, then you report the forex gains or losses the same as futures gains and losses on Form 6781 (the 60/40 form).
It's that simple. Thanks. |
Hi,
I ‘m also confused by tax implications. I need to buy your book, or perhaps hire a CPA going forward. I am already filed for this year, and am looking to handle tax situation more efficiently next year. In summary: First year, lost about $1000, did not report the loss, do to uncertainty about how. Second year, made $2200. Reported it as capital gain on Schedule D per Publication 525 (Miscellaneous Income) - page 28 (Other Income) -Paraphrased: “…Must report profits from exchange rates in excess of $200 as Capital gains…” Third year, (2006, to be reported in 2007) I’m showing solid gains, and hope to increase b-4 year’s end. My plan was to report them as Cap. Gains, just as last year. Then, beginning Jan 1st 2007 would like to restructure as “self-employed” or whatever it takes to minimize tax burdens going forward, assuming my trading continues to have legs. I’m sure there are dozens of angles a CPA would know about, that could be useful. Any thoughts to point me in the right direction greatly appreciated.
I'll check the links you provided for more information...
Your help greatly appreciated.