1) Has anybody had net a net loss on spot cash Forex in 2005 who used Turbotax ? On the "Premier 2005 TT" I entered my net loss as a negative # in the "other income" section of TT.

I had an online chat w/ TT rep to confirm.- they said they ran my entry to see which line it specifically goes to , on Form 1040. They said it goes to line 21, Form 1040.

I'm wondering if anybody else did it this way ?

2) I made all my deposits into my FXCM account with my credit card. All but $49 was lost during trading. I closed the account and my broker sent a check for $49. A couple questions have arisen :

a) Can I still claim this net loss since the account was funded by credit card transfer ?

b) Should I add the $49 into my adj gross income , or, just not include it in the net loss lon line 21 ?

c) Does negative interest count as part of the loss ?

Anybody have info on this ?

Spot forex loss is reported on line 21 of Form 1040, unless you elected out of IRC 988 and sounds like you did not.

Funding an account with credit cards is risky of course, but you do have tax basis in the eye's of the IRS, so you can take the loss. If you have debt extinquishment later on as a result of not paying back your credit card company you will have phantom income.

Interest income goes on Schedule B and interest expense on Schedule A or if trader tax status on Schedule C.

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Thanks a million for the advice. I just finished the taxes this year. All the confusion has been cleared up for this year. Should I profit in 2006, I will also have a better understanding thanks to this website.

Your welcome.

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