The number of trades rather than contracts is what matters most. Figure you need over 400 round turn trades, with a trade or more every day and more than 4 hours per day. Also very short holding periods of days, not weeks and an intention to run a business. The number of contracts does not indicate activity levels.

The rules are vague and nuanced. We cover them in my book The Tax Guide for Traders. Also see the power point presentation on our GreenTraderEducation page from our home page.

I usually help people determine if they qualify for trader tax status in a 30 minute consultation. There are many factors to consider and the bar is raised when you have another job.

You might qualify for trader tax status as a part-time trader, but the bar to qualify is higher.

We need to know your number of trades, hours per day and much more. We determine trader tax status in 30 minute consultations. You can sign up here http://www.greencompany.com/Traders/...nsulting.shtml.

Mindy of customer service can schedule you within a day, so there is time to help you.

The IRS looks to the number of trades made rather than the number of total contracts. The IRS wants to see one or more trades every day with no sporadic lapses.

Part time traders with other jobs can qualify for trader tax status but the bar is raised, since the IRS is more skeptical.

You could have traded a large number of contracts once per week with longer term holds and that would not qualify.

There are many factors including number of trades, hours per day, expenses, intention to run a business, holding periods and more.

The decision is as much an art as a science.

Learn more about trader tax status in IRS Publication 550 Chapter 4 Special Rules for Traders available at www.irs.gov.

We cover it in much more depth in my book The Tax Guide for Traders in Chapter 1. The Gold Package has the book plus all our tax examples guides, including our Commodities, Futures and Forex Guide. http://www.greencompany.com/Traders/Guides.shtml.

When in doubt its best to have a 30 minute consultation with me to assess whether or not you have trader tax status and to cover other trader tax benefits as well. http://www.greencompany.com/Traders/...nsulting.shtml

Thanks.

Hello I live in Vancouver, British Columbia. I am curious to know what form I have to fill out to claim my $1000 loss. Furthermore, if I were to open a partnership with my wife, what would be the benefits/negative? Or should I just open a proprietorship? I also have a regular full time job.

Thanks,

If you are a non-resident alien of the US - sounds like you are - then you may not owe US taxes, as it doesn't sound like you have US source income from trading forex with a US-based forex broker.

Learn more here http://www.greencompany.com/Educatio...Resident.shtml.

Forming a US-based entity may trigger US source income, so that may not be a good idea.

Consider a consultation for more indepth review of your issues if any.

We can not comment on Canadian taxation and rules.

Hello. Would you please be kind enough to provide us with some information about how forex capital gains / loss are taxed in Canada?

Thanks

Hello. Would you please be kind enough to provide us with some information about how forex capital gains / loss are taxed in Canada?

Thanks

Raheem

Sorry, we are not experts on Candadian taxation.

Sorry for the delayed reply.

I need to know the number of traders, not the number of contracts.

In order to qualify for trader tax status - business tax treatment - you need to trade almost every day; with one of more trades per day.

Part time forex traders can qualify easier than securities or futures traders because the forex markets are open 24/7; so they can trade at night after working another job during the day.

See our power point presentation in pdf on Forex Tax & Trader Tax.
http://www.greencompany.com/Educatio...enWorkshop.pdf

Consider a consultation with me to determine if you qualify and if you should use an entity or not. http://www.greencompany.com/Traders/...nsulting.shtml

Thanks.

I have a question about line 21 on 1040. Do you need to include a list of all spot forex trades if you use 1040 line 21 to file gains/losses? Also is there a maximum gain/loss for this line? I did not opt out of sect. 988 so I will file on 1040 line 21.

Report the net gain or loss on forex trading - not line by line reporting - on line 21 of Form 1040, if you did not elect out of IRC 988.

There is no limited on an ordinary loss on line 21, as there are capital loss limites of $3,000 per year on Schedule D for capital gains and losses.

so you are advising to use "mark-to-market accounting" in order to use IRC 1256 and secondly to get a "business name" to receive additional tax breaks?

thanks

Hi, Is it true that if I elect for 1256, I have to attach a list of asset and that also means I can not e-file? What exactly should the list be, line by line transaction or just aggregated gain/loss?

Not IRC 475 mark to market (MTM) accounting, but IRC 1256 which has a different type of MTM built in.

You don't need a business name; you just need to qualify for trader tax status - to have business expenses treatment.

No. IRC 1256 contracts are reported in summary form. This has no effect on e-filing.