Quote:
Originally Posted by GreenTrader Tax
An LLC can help; but in just a few ways.
It's best to use a pass-through entity like an LLC taxed as a partnership. That means all income and losses passes through to your individual tax return; where you pay taxes. No taxes are paid on the entity level, except some minimum (stealth) taxes due in most states.
So the character of the income and loss does not change. If it's IRC 988 ordinary gain or loss on the partnership return (LLC), it's the same on your individual return.
Single owned LLC's are "disregarded entities" and since you don't have a partner all the income and loss is reported directly on your individual tax return. There is no partner so you can't file a partnership tax return.
You need trader tax status to qualify for business treatment, even in an entity.
Entities are helpful tax wise is creating the opportunity for AGI deduction like retirement plans and health insurance premiums.
Learn more on our Entities Page here http://www.greencompany.com/Traders/...Entities.shtml.
We consult traders on the best entities for them and then we form the entities. |
Interesting information,
So what is avaliable to a solo forex "night owl" trader that trades every night / morning, (scalps, so many trades within a night extreemly short term) 4-5 hours a night, and has no partner, in his quest to achieve ad maintain "Trader status"?
Sole props would not be a good fit it sounds.. Correct me if I am wrong, but from reading the above, an LLC would not fit either if you do not have a partner. (is this correct?)
Also I have a day job that is not tied into my trading which I get a w2. Would this be a problem for the business if I started a solo LLC?
Would the LLC be subject to self employment tax because of not having a partner?
Not everybody is Married, (I am not) or has access to a partner to go in with ya (friends are SCARED of FOREX), so what does one do?
I kinda see running an LLC as a added benefit because I could expand it in the future. What would be a good fit in this scenario?
-- c0w.