Question: IRS "Trader" Tax designation
Q.Can anyone give me any info on the IRS tax designation, "Trader in Equities"? (I think that's what it's called). If one's primary source of income is through trading, I have heard that commissions, trading software, etc are tax deductable...daytraders are commonly registered in this way, etc. Searched the IRS website for 10 minutes, but couldn't find my answers about the conditions to fall under this designation
A.1. You must register (how I don't know) with the IRS by some specific date (may have been March 31st). 2. If you do register as a trader, all gains or losses for the period from 1/1/** thru 12/31/** are accountable for that year based on the values of the securities on 12/31 relative to 1/1 whether you close out your position or not. 3. Yes, then you can deduct things like computers, internet fees, cellphones etc. (I use one for net access sometimes). Does not matter if you trade full time or part time. (Commissions are always deductible trader or not.) Not much but that is the gist of what I remember. I'm sure someone on here knows more about it than I. The above is what I think he said. May or may not be correct. Everyone can deduct expenses related to the pursuit of gains in the stock market. Such as commissions, computer on pro rated basis, newsletters, taking your broker out to dinner, etc. Things you can't deduct if you are not designated a professional would be things like rent, depreciation, etc.
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