Entity Tax-Advantaged Solutions For Traders

06 May

May 06, 2015 at 4:15 pm EST

Forming an entity can save traders significant taxes and simplify tax filings. Join Green NFH CPA and entity tax expert Robert A. Green CPA as he explains the following:

  • Wash sales: By trading in an entity, security traders can reduce Section 1091 wash sale losses with individual investments and IRAs since the entity has a separate taxpayer ID. Keep an eye out for Section 267 related party transaction rules.
  • Section 475 MTM: A new entity can elect Section 475 MTM within 75 days of inception and it can revoke the election in a subsequent tax year if that’s helpful.
  • Employee-benefit plans: Those who qualify for “trader tax status”(business treatment) are better off trading in an entity vs. individual accounts as a Schedule C sole proprietor. The entity looks much better to the IRS and it also unlocks additional tax savings from employee-benefit deductions (health insurance and retirement plans). Learn how to maximize employee-benefit deductions.
  • Best entities: Learn the best choice of entity for different situations. An S-Corp is best for maximizing employee-benefit deductions; otherwise, a partnership tax return works well. A C-Corp is inappropriate as a trading vehicle, but okay as a management company. In some cases, having a trading company and a management company is helpful.
  • Costs: Learn about the low costs for forming and operating a trading entity. Tax savings is far greater than cost.
  • Timing: Mid-year is an excellent time to form a trading entity. It breaks the chain on wash sales in your individual taxable accounts and there’s plenty of time to maximize employee-benefit plan deductions for the entire year.



Re: Won tax case in Kentucky. Whew! When I learned the good news this afternoon, I can’t begin to tell you what a relief I experienced to be liberated from the year-long tax nightmare involving Ryyyy LLC! As all of us sadly know, simple justice is often not simple at all but can be financially and emotionally draining. The fact that it has prevailed this time is largely thanks to the support of each of you. Please know that your efforts on my behalf will ever be remembered with gratitude. I hope that in the future I can thank each of you in person.