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Could 10:1 be the new leverage in US Forex?

  • #881
  • Mar 29, 2010 2:14am Mar 29, 2010 2:14am
is it really necessary to have a trading account in one's name...?


just asking....
Nihil inimicus quam sibi ipse Marcus Tullius Cicero
  • #882
  • Mar 29, 2010 2:19am Mar 29, 2010 2:19am
Quoting coscorp
is it really necessary to have a trading account in one's name...?


just asking....
Mine are in the name of the S-corp that I am president of, but the IRS is no fool.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #883
  • Mar 29, 2010 2:35am Mar 29, 2010 2:35am
if you have it in the US....I would presume so...but I heard one can open them somewhere......else...... as well...


not that I'm encouraging anyone to do so....just referring what I heard...


could be I'm wrong ....could be I'm right....
Nihil inimicus quam sibi ipse Marcus Tullius Cicero
  • #884
  • Mar 29, 2010 2:56am Mar 29, 2010 2:56am
Quoting coscorp
could be I'm wrong ....could be I'm right....
You can go to Panama or Costa Rica and invest a minimal (used to be $60k - might be less now - times is tuff) amount in certain sectors of the economy and they will give you residency - which you can prove into full citizenship after some time. Form a sociedad anonima (SA) - that's what they call corporations there - to handle your investments. Let the SA invest in forex trading or whatever - it will be taxed as a Panamanian corporations but the USA will not be able to touch the SA's revenue. If you take some income off the corporation's profits then the USA of A can tax that, but your offshore SA can hold assets - a nice beach house (where else are you gonna entertain clients?) and a decent sized yacht (why live at the beach if you don't have a boat?) and any number of expenses that arise in the operation of the SA, like nights out, business attire, salary for the live-in secretaries, etc.

Corporations are like pets - everybody should have at least one.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #885
  • Mar 29, 2010 3:48am Mar 29, 2010 3:48am
and in the right jurisdiction......
Nihil inimicus quam sibi ipse Marcus Tullius Cicero
  • #886
  • Mar 29, 2010 8:55am Mar 29, 2010 8:55am
Quoting ScottyB
Worlds a lot bigger place then america. They can force there forex brokers to do what they like however unless everyone in the world does the same then its pointless. People will just go elsewhere. I cannot see why you would use an american broker if indeed you were american in the first place. Not sure what your tax is but I know its around the 50% mark. There are a lot of other countries where its 0.
The bolded statement is incorrect. Spot FX in the US can be treated as an IRS section 1256 contract, and therefore receives a blended 60/40 tax rate of long term/short term capital gains rates, respectively. This categorization makes the maximum federal tax rate on spot FX gains equal to 23%.
Hindsight is 20/20
  • #887
  • Mar 29, 2010 10:10am Mar 29, 2010 10:10am
Quoting cosgrove
The bolded statement is incorrect. Spot FX in the US can be treated as an IRS section 1256 contract, and therefore receives a blended 60/40 tax rate of long term/short term capital gains rates, respectively. This categorization makes the maximum federal tax rate on spot FX gains equal to 23%.
does it make sense if you're making under $200K/year to do that ? I mean federal tax for under $200K is currently 15%
  • #888
  • Mar 29, 2010 12:31pm Mar 29, 2010 12:31pm
Quoting cosgrove
This categorization makes the maximum federal tax rate on spot FX gains equal to 23%.
For the remainder of the year anyway. ST max rate goes up to 39.6% and LT rate goes up to 20% when the Bush cuts expire 12/31/10. Add on a 3.9% health insurance reform surcharge to both rates for individuals earning >$200k. The 60/40 rule narrowly avoided death in the same bill, but I won't be surprised to see them attack it again. Could be looking at 43.5% on the high end before state/city taxes, fun times...
  • #889
  • Mar 29, 2010 12:38pm Mar 29, 2010 12:38pm
Quoting The Fool
I read that and interpreted it differently, assuming that my funds held by a British (Maltese?) broker would be held in a custodial account at the brokers bank
The broker's bank account is just a large, commingled account. There's no separation of client ownership at the bank level to qualify it as custodial. Client accounts are merely records on the broker's internal accounting system. It's definitely a gray area.
  • #890
  • Edited 8:57pm Mar 29, 2010 7:20pm | Edited 8:57pm
Quoting m78
does it make sense if you're making under $200K/year to do that ? I mean federal tax for under $200K is currently 15%
Not sure where you're getting your info from...The Tax Guide for Traders says spot forex gains are treated as ordinary gains (and therefore ordinary income tax rates up to 35% for 2010) and fall under IRS section 988 unless you specify (internally) that you would like them treated as IRS section 1256 gains (which follow the tax rate I already explained).

Quoting Trader KGB
For the remainder of the year anyway. ST max rate goes up to 39.6% and LT rate goes up to 20% when the Bush cuts expire 12/31/10. Add on a 3.9% health insurance reform surcharge to both rates for individuals earning >$200k. The 60/40 rule narrowly avoided death in the same bill, but I won't be surprised to see them attack it again. Could be looking at 43.5% on the high end before state/city taxes, fun times...
Not sure where you got 43.5%...the 60/40 split is 60% LT and 40% ST. So if the tax cuts are not renewed and you make more than $200k/year, (if I understood you correctly) your new federal tax rate on your spot FX gains is 31.74%:

(0.396+0.039)*0.4 + (0.2+0.039)*0.6 = 0.3174

An individual's max rate on spot FX gains without any surcharge would change to 27.84% if the tax cuts are not extended.

edit: "Keeping a campaign pledge, Obama wants to extend the cuts for people who earn less than $200,000 and families that earn less than $250,000. But Obama and most Democrats want to let the cuts for the richer groups expire." [http://moneynews.com/StreetTalk/Levi...3/18/id/353132]
Hindsight is 20/20
  • #891
  • Mar 29, 2010 9:48pm Mar 29, 2010 9:48pm
Quoting cosgrove
Not sure where you're getting your info from...The Tax Guide for Traders says spot forex gains are treated as ordinary gains (and therefore ordinary income tax rates up to 35% for 2010) and fall under IRS section 988 unless you specify (internally) that you would like them treated as IRS section 1256 gains (which follow the tax rate I already explained).
the 35% is when your AGI is over $372,951+ ... (when single)
those lower paid traders might quality for a lower tax rate ... eg: as far as I remember after kids, deductions etc I would pay around 15-18% real tax
  • #892
  • Mar 29, 2010 10:11pm Mar 29, 2010 10:11pm
Quoting m78
the 35% is when your AGI is over $372,951+ ... (when single)
those lower paid traders might quality for a lower tax rate ... eg: as far as I remember after kids, deductions etc I would pay around 15-18% real tax
Yes, which is why I said "up to" -- I believe mine will be about the same as yours.
Hindsight is 20/20
  • #893
  • Mar 30, 2010 2:17am Mar 30, 2010 2:17am
Quoting cosgrove
Not sure where you got 43.5%...
Sorry, I should have specified, that was just my hypothetical worst case analysis of the 60/40 split eventually being repealed (combined with the 3.9% surcharge for >$200k). I'm hoping, of course, that it doesn't to pass. However, they're going to need to raise trillions, so I'll count my blessings every year it remains intact.
  • #894
  • Apr 2, 2010 3:35pm Apr 2, 2010 3:35pm
Hope you guys and girls have one minute to sign the Petition,,,
http://www.petitiononline.com/mod_pe....cgi?gensler&1
  • #895
  • Apr 2, 2010 9:11pm Apr 2, 2010 9:11pm
Quoting wwwin
Hope you guys and girls have one minute to sign the Petition,,,
http://www.petitiononline.com/mod_pe....cgi?gensler&1
Done.
  • #896
  • Apr 3, 2010 7:38am Apr 3, 2010 7:38am
Priceless one liner in the petition comments

"Chairman Gensler has demonstrated such a lack of understanding of the retail forex market as to discredit any notions he is qualified to regulate it. He should be immediately replaced."
  • #897
  • Apr 3, 2010 7:42am Apr 3, 2010 7:42am
Quoting Jade Gate
Priceless one liner in the petition comments

"Chairman Gensler has demonstrated such a lack of understanding of the retail forex market as to discredit any notions he is qualified to regulate it. He should be immediately replaced."
hehe, if only this liner came from one of the congressman lawmakers.
  • #898
  • Apr 8, 2010 3:58pm Apr 8, 2010 3:58pm
any updates on the leverage situation?...
Nihil inimicus quam sibi ipse Marcus Tullius Cicero
  • #899
  • Apr 8, 2010 4:12pm Apr 8, 2010 4:12pm
i dont have a us broker anyways i dont care, uk and euro brokers are the way to go
  • #900
  • Apr 8, 2010 4:36pm Apr 8, 2010 4:36pm
CFTC's website has had a make-over. Big improvement.


http://www.cftc.gov/
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