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TurboTax and Spot Forex 4 replies

Turbotax

  • #1
  • First Post: Mar 7, 2007 7:56pm Mar 7, 2007 7:56pm
Hi there, i have a ? about turbotax. I am reporting my forex profits under section 1256 "Contracts and Straddles" on TT. The thing is, it wants me to report ALL of my forex contracts for the year. What do I do? I have my transaction history on my computer but don't want to type it all in TT, that would take FOREVER! any suggestions? Thanks!
PipMasterFlex
  • #2
  • Mar 7, 2007 8:01pm Mar 7, 2007 8:01pm
you don't have to report under 1256 unless you traded contracts ... you can report forex trades as simple interest, check this out ...

http://www.armencomp.com/tradelog/trader_taxes.shtml

and by my girlfriend CPA confirmed that was her understanding as well
Smile... Darwin loves you.
  • #3
  • Mar 7, 2007 8:02pm Mar 7, 2007 8:02pm
Risk the audit and don't do it man!

JUST KIDDING...

*sigh* I wouldn't f-ck with the IRS. If you don't want to have to explain yourself in detail to them later, I'd spend the time to detail it to them now.

Your other option is to PAY a tax preparer. That would be my real suggestion.

Quoting isufreak24
Hi there, i have a ? about turbotax. I am reporting my forex profits under section 1256 "Contracts and Straddles" on TT. The thing is, it wants me to report ALL of my forex contracts for the year. What do I do? I have my transaction history on my computer but don't want to type it all in TT, that would take FOREVER! any suggestions? Thanks!
  • #4
  • Mar 7, 2007 8:04pm Mar 7, 2007 8:04pm
GP,

I'm wondering about the accuracy of this info. I could have sworn there was a 60-40 rule. There's a tax thread that may shed some light.
  • #5
  • Mar 7, 2007 8:12pm Mar 7, 2007 8:12pm
i have been combing the internet and have not seen anything about reporting it as interest?
THe LAST thing I want is an audit. I am an IRSphobic. I'm only 18 and i don't want to piss off the IRS my first time doing this!
PipMasterFlex
  • #6
  • Mar 7, 2007 8:20pm Mar 7, 2007 8:20pm
Report overall total per account and save your transactions for a year in report to show to IRS if need be. That's what I did.
IRS doesn't get any of this info anyway, unlike your stock trading. There is no requirement for it. Forex is still too small a fish for IRS.
  • #7
  • Mar 7, 2007 8:23pm Mar 7, 2007 8:23pm
Quoting gpw797
you don't have to report under 1256 unless you traded contracts ... you can report forex trades as simple interest, check this out ...

http://www.armencomp.com/tradelog/trader_taxes.shtml

and by my girlfriend CPA confirmed that was her understanding as well

Every search on google's first page about forex taxes talks about sections 1256 and electing out of 988.... nothign about simple interest???? that link gives no reasoing, just exactly what you said? you tryin to get the irs after me? lol!
PipMasterFlex
  • #8
  • Mar 7, 2007 8:26pm Mar 7, 2007 8:26pm
Quoting irusoh
Report overall total per account and save your transactions for a year in report to show to IRS if need be. That's what I did.
IRS doesn't get any of this info anyway, unlike your stock trading. There is no requirement for it. Forex is still too small a fish for IRS.
Thats what i think i have to do. I have all of my transactions, but i don't want to type them into turbotax, and TT isn't giving me any option to import them besides typing them all in? so i don't know....
PipMasterFlex
  • #9
  • Mar 7, 2007 8:40pm Mar 7, 2007 8:40pm
Quoting gpw797
you don't have to report under 1256 unless you traded contracts ... you can report forex trades as simple interest, check this out ...

http://www.armencomp.com/tradelog/trader_taxes.shtml

and by my girlfriend CPA confirmed that was her understanding as well

Actually, you can have 1256 Status and trade spot currency too. This is not only for forex contracts. You can read about this under the tax expert section of this forum.

You only need the total, not all transactions for the year. One wants to report under 1256 Status if you want the advantages of the Capital Gains 60/40 rule.
  • #10
  • Mar 7, 2007 9:50pm Mar 7, 2007 9:50pm
I think one most important thing here that IRS cares about, if you had any trades straddling 2006/2007 you have to find their value at end of 2006 and report it as profit/loss as if you sold them at the end of the year. Then reporting 2007 income you will need to report them as if you opened them on jan 1,2007 I guess.
This is called marked to market.
  • #11
  • Mar 7, 2007 10:12pm Mar 7, 2007 10:12pm
In order to report spot forex under 1256, you must have made an election to do so prior to beginning to trade. This is a self made election. There is no actual form submission required. If you didn't do that, you can just report your earning or losses under Other Income not interest. Just label it as from IRC 988. That way you only need the total. This may or may not suit your particular tax situation and should not be construed as tax advice, and I would suggest that you contact someone, who knows what they are doing. You can probably find a preparer for just a bit more than you are paying for Turbotax. Although unless they are traders, they may not be that familiar with the laws regarding trading even if the sign says CPA. Otherwise just dig up the IRS publications on IRC 1256 and IRC 988 and study them for yourself. Also be aware that when you use tax software to prepare a tax return, you must not only know the tax laws but also how to correctly work the programs. I had a customer a few years ago, who cost himself sevaral hundred dollars in penalties because he didn't read the instructions for the program carefully enough. No, Turbotax won't pay the penalties, if you mess up. That only applies to mistakes the program makes.
Quoting isufreak24
Hi there, i have a ? about turbotax. I am reporting my forex profits under section 1256 "Contracts and Straddles" on TT. The thing is, it wants me to report ALL of my forex contracts for the year. What do I do? I have my transaction history on my computer but don't want to type it all in TT, that would take FOREVER! any suggestions? Thanks!
  • #12
  • Last Post: Mar 8, 2007 1:10am Mar 8, 2007 1:10am
FX tax article in this thread.

http://www.forexfactory.com/showthre...986#post197986
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