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FF Trader Tax Thread

  • #101
  • Mar 9, 2007 2:28am Mar 9, 2007 2:28am
Quoting Trader Tax
If you are trading Forex Futures, you do not have to list all of your trades, if you are trading 988 trades and opting out,yes you do have to turn in a log showing that you did opt out of each trade converting them to 1256 contracts. Your broker is required to give you some type of documentation for the IRS. It used to be that they were not, but now they are. 03/08/07 www.tradersaccounting.com Jim Crimmins
EDIT: I misread this post. Oops.
Just to clarify for those reading along:

I use another CPA for my own taxes (http://www.traderstatus.com/ ). According to my CPA, the spot forex market by default falls under 988 rules, not 1256. Furthermore, a trader can elect 1256 taxation, but must mark all such trades in advance of placing them (and have some sort of indication to show this). The important point here for readers is that they must explicitly flag trading transactions according to which rule they want. This will help avoid IRS audits.

I also highly recommend that US traders trading more than about 10k make use of a professional CPA (Jim or otherwise). Without detailed record keeping (and compliance), it is easy to get audited, because IRS officials know next to nothing about daytrader circumstances. It is possible for you to report your activity completely correct, and agents may still believe you are in error.
  • #102
  • Mar 16, 2007 2:32pm Mar 16, 2007 2:32pm
tradertax, i am not opting out of 988, do i need to attach trades to return?
PipMasterFlex
  • #103
  • Mar 17, 2007 10:32pm Mar 17, 2007 10:32pm
Quoting isufreak24
tradertax, i am not opting out of 988, do i need to attach trades to return?
Yes you do a log showing that you opted out of each trade. We have a free excell spreadsheet on our website www.tradersaccounting.com. I think it is under products and is called a trade tracker spreadsheet. You need to add another column showing that you opted out of each trade, but that is the easiest way to do it that I know. Traders Accounting 03/17/07 Jim Crimmins
  • #104
  • Mar 18, 2007 1:25pm Mar 18, 2007 1:25pm
Quoting Trader Tax
Yes you do a log showing that you opted out of each trade.
????? I am confused, i'm not opting out of anything, am i? i want to be taxed under 988.
PipMasterFlex
  • #105
  • Mar 18, 2007 1:36pm Mar 18, 2007 1:36pm
Quoting isufreak24
tradertax, i am not opting out of 988, do i need to attach trades to return?
You will report your gains/losses as ordinary income/loss and report on Schedule 1040. to my knowledge you do not have to include your trades. 03/18/07 Traders Accounting Jim Crimmins
  • #106
  • Mar 18, 2007 4:06pm Mar 18, 2007 4:06pm
Thanks Jim for your time!
PipMasterFlex
  • #107
  • Mar 18, 2007 4:59pm Mar 18, 2007 4:59pm
Quoting Trader Tax
Yes you do a log showing that you opted out of each trade. We have a free excell spreadsheet on our website www.tradersaccounting.com. I think it is under products and is called a trade tracker spreadsheet. You need to add another column showing that you opted out of each trade, but that is the easiest way to do it that I know. Traders Accounting 03/17/07 Jim Crimmins
Cannot find the spreadsheet at the site...can someone post here??
  • #108
  • Mar 20, 2007 5:18pm Mar 20, 2007 5:18pm
Quoting baddison
Cannot find the spreadsheet at the site...can someone post here??
http://tradersaccounting.com/pages.php?pageid=21
  • #109
  • Mar 20, 2007 8:22pm Mar 20, 2007 8:22pm
I can use some assistance as I am doing my tax work. Ended up the year with a loss and reporting the FX transactions using form 1256. I am not sure what to elect: Mixed Straddle, Straddle by Straddle, Mixed Straddle account election, net 1256 contracts loss election.

Thoughts apperciated...

Thanks

Mike
  • #110
  • Mar 21, 2007 11:22am Mar 21, 2007 11:22am
Quoting ForexMike
I can use some assistance as I am doing my tax work. Ended up the year with a loss and reporting the FX transactions using form 1256. I am not sure what to elect: Mixed Straddle, Straddle by Straddle, Mixed Straddle account election, net 1256 contracts loss election.

Thoughts apperciated...

Thanks

Mike
I understand how you feel Mike, it is all very confusing. We cannot offer this type of tax help on Forex Factory, there is too much liability concern when we cannot check the final product to make sure that anyone would understand what was said on an email, and apply it correctly. I would recommend that anyone trading Forex take their return to a qualified tax preparer that understands Forex taxation. 03/21/07 Traders Accounting Jim Crimmins
  • #111
  • Mar 21, 2007 7:27pm Mar 21, 2007 7:27pm
Quoting Trader Tax
I understand how you feel Mike, it is all very confusing. We cannot offer this type of tax help on Forex Factory, there is too much liability concern when we cannot check the final product to make sure that anyone would understand what was said on an email, and apply it correctly. I would recommend that anyone trading Forex take their return to a qualified tax preparer that understands Forex taxation. 03/21/07 Traders Accounting Jim Crimmins
Very Good - thanks Jim for the reply
  • #112
  • Edited Apr 2, 2007 3:22am Apr 1, 2007 3:40pm | Edited Apr 2, 2007 3:22am
Hi. This is my first post. I'm not even sure if I should be posting here because I am a forex investor, not a trader. I have given a kick-ass trader the POA to trade for me. And I have to admit I am really a dummy in this area.

Anyway, I have seen it stated many times that forex income/loss is reported on line 21 (other income) of the 1040.

However, I found the following text here: {Link Removed}

"....I got to the IRS employee with all the investment answers. I described my forex trading activity and the 1099-B form I'd received, and his answer was unambiguous: report the gains on Schedule D. Report them as short-term gains. Pay taxes at the short-term gain rate. Describe them as gains from currency investments. End of story."

So does anyone know what is really the correct thing to do? It sounds like you could get away with doing it either way. I just want to pay as little tax as is humanly possible and stay on the right side of the IRS.

Thanks for any help you can give.
  • #113
  • Apr 2, 2007 3:18am Apr 2, 2007 3:18am
*cough*

excuse me...bad cold
  • #114
  • Apr 2, 2007 10:41am Apr 2, 2007 10:41am
Quoting jonk1969
Hi. This is my first post. I'm not even sure if I should be posting here because I am a forex investor, not a trader. I have given a kick-ass trader the POA to trade for me. And I have to admit I am really a dummy in this area.

Anyway, I have seen it stated many times that forex income/loss is reported on line 21 (other income) of the 1040.

However, I found the following text here: {Link Removed}

"....I got to the IRS employee with all the investment answers. I described my forex trading activity and the 1099-B form I'd received, and his answer was unambiguous: report the gains on Schedule D. Report them as short-term gains. Pay taxes at the short-term gain rate. Describe them as gains from currency investments. End of story."

So does anyone know what is really the correct thing to do? It sounds like you could get away with doing it either way. I just want to pay as little tax as is humanly possible and stay on the right side of the IRS.

Thanks for any help you can give.
The realm of FOREX taxation is dark with mysteries. You have not stated whether you were trading 988 FOREX or Forex Futures, so cannot offer any advice. I would definitely suggest you contact an accountant that really understands FOREX to get your taxes done. You can see even the IRS is confusted, and if you have found a Kick Ass trader use some of your profits to pay for it. 04/02/07 Traders Accounting Jim Crimmins
  • #115
  • Apr 3, 2007 3:09am Apr 3, 2007 3:09am
K. Thanks, Jim. I really have no idea what type of forex the trader is trading! I'll have to find out!
  • #116
  • Apr 10, 2007 12:01am Apr 10, 2007 12:01am
I lost over $20K with GFT but they sent me a 1099-B form! Does that mean I can only claim $3000 loss?? What's up with that?

By the way, I was trading cash forex, not futures so I really don't understand the 1099??
  • #117
  • Apr 10, 2007 12:13am Apr 10, 2007 12:13am
How about a nice bullet pointed checklist of what we tax "oppourtunities" (or loopholes, what ever you perfer to call them) we should be setting up as active forex traders. . .

What do i need to do to maximize these oppourtunities in the future ?
Keep it simple stoopid....
  • #118
  • Apr 11, 2007 11:56am Apr 11, 2007 11:56am
Quoting jimh7257
I lost over $20K with GFT but they sent me a 1099-B form! Does that mean I can only claim $3000 loss?? What's up with that?

By the way, I was trading cash forex, not futures so I really don't understand the 1099??
If you were trading the Cash Forex market, and did not opt out of the 988 trades, then you have an ordinary loss that can be deducted against any other ordinary income you have. If it is a Forex Futures, then it would be a capital loss, and you would be limited to the $3K deduction. Don't worry about the 1099, as I understand it the IRS is trying to get all brokers to issue 1099s. 04/11/07 Traders Accounting, Jim Crimmins
  • #119
  • Apr 11, 2007 12:00pm Apr 11, 2007 12:00pm
Quoting Kurka Fund
How about a nice bullet pointed checklist of what we tax "oppourtunities" (or loopholes, what ever you perfer to call them) we should be setting up as active forex traders. . .

What do i need to do to maximize these oppourtunities in the future ?
Oh, that it were so easy. The easiest way to get this is to go to our website www.tradersaccounting.com and download the three page confidential questionnaire, fill it out and return it. We will then send you a free 40-page report on how we see your best and most tax efficient trading situation. Hope this helps. 04/11/07 Traders Accounting, Jim Crimmins
  • #120
  • May 10, 2007 10:43am May 10, 2007 10:43am
Hi Jim, i'm a TA client and thought this Q was relevant for viewers so i'm posting it here.

I have an LLC set up through you and have monthly bookkeeping etc., for accounts that i personaly trade. My question is, if an individual chooses to have additional spot forex accounts opened and traded by a "manager" should those managed accounts be kept seperate from my personal accounts/LLC similar to how i would keep my other sources of income seperate from my trading LLC?

Thanks in advance !
: ) Thom
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