Tag Archives: IRS

Green’s 2023 Trader Tax Guide

June 18, 2020 | By: jparasole

Purchase the online PDF version in our Green & Company, Inc. store. Amazon offers a paperback version.

Our online guide PDF is 113 pages, 8 x 11, single-spaced, and easy to read. You get access immediately after purchase and see the Download PDF link in your email receipt. We might update this online guide during 2023 for tax changes that impact traders, and you will have access to the updated versions. 

Highlights

Use Green’s 2023 Trader Tax Guide to receive every trader tax break you’re entitled to on your 2022 tax returns. Learn intelligent moves to make in 2023. Whether you self-prepare your tax returns or engage a CPA firm, this guide can help you optimize your tax savings. Even though it may be too late for some tax breaks on 2022 tax returns, you can still use this guide to execute these tax strategies and elections for tax-year 2023.

The 18 chapters cover trader tax status, Section 475 MTM, tax treatment (equities, 1256 contracts, options, ETFs, ETNs, forex, precious metals, cryptocurrencies, etc.), accounting for trading gains and losses, trading business expenses, tips for preparing tax returns, tax planning, entity solutions, retirement plan strategies, IRS and state tax controversy, traders in tax court, proprietary trading, investment management, international tax, ACA Net Investment Income Tax, short selling, Tax Cuts and Jobs Act, CARES Act, and recent tax law changes.

Green’s Trader Tax Guide has been published yearly since 1997 and remains the gold standard in trader tax.

About the Author
Robert A. Green is a CPA and CEO of Green & Company, Inc. (GreenTraderTax.com). Mr. Green is a leading authority on trader tax and a Forbes contributor. He is also the author of The Tax Guide for Traders (McGraw-Hill, 2004) and Green’s annual Trader Tax Guide. Mr. Green is frequently interviewed and has appeared in the New York Times, Wall Street Journal, Forbes, and Barron’s. He is the Traders Expo’s chief tax speaker and presents tax Webinars for Interactive Brokers, TradeStation, Lightspeed, and other trading industry participants.

 

 

IRS Data Hacking Prompts New Refund Advice

June 2, 2015 | By: Darren L. Neuschwander CPA

As was widely reported over the last week, over 100,000 taxpayers’ personal information — including Social Security information, date of birth and street address — was hacked from the IRS Website. We have experienced identity theft for income tax purposes with several clients over the last couple of years, and it’s a very painful process. Usually, someone files a fraudulent return, trying to get a refund. The victim receives an IRS letter asking about a refund, when he has not filed a tax return yet.

The taxpayer has to fill out a new form with the IRS, file a paper tax return and likely wait up to six months (if he is lucky) to get the refund back.

Many taxpayers like to bank on a refund for vacations or other large anticipated expenses. Rising tax fraud is another reason why I would suggest never getting a refund; instead, set aside extra money from your paycheck each pay period.

Many of our trading clients have outside jobs and will get a decent refund due to trader status and MTM accounting. I suggest these clients change their withholding to get less of a refund and more cash throughout the year.

If you’re counting on that large tax refund, this latest case of stolen identity goes to show that it may happen much later than you would like, or not at all.

IRS And State Exam Controversy For Traders (Recording)

October 14, 2014 | By: Robert A. Green, CPA

Join Green NFH’s Robert A. Green CPA and Mark Feldman, tax attorney in this Webinar.

There’s been an increase in tax exams over trader tax status, cost-basis reporting and related issues. Recently, our CPA firm successfully represented a trader in tax court. State tax authorities are also challenging trader tax status and related Section 475 MTM ordinary loss treatment, trying to avoid issuance of large tax refunds. Learn the latest arguments raised by IRS and state tax authorities on the exam and appeals level, and how to mount a successful defense. In this Webinar, we will cover:

  • Highlights of our recent “small claims” petition filed in federal tax court with favorable outcome.
  • Highlights of recent state tax controversy over trader tax status.
  • IRS cost-basis reporting controversy including tax notices.
  • IRS attacks on weak segregation of investment positions vs. trading business positions and related implications for trader tax status and use of Section 475 MTM ordinary gain or loss treatment.
  • Review of trader tax status requirements.
  • Common mistakes traders and local tax preparers make that invite IRS and state controversy.
  • Questions and answers.

For traders involved with IRS or state tax controversy, we recommend our IRS & State Tax Exam Representation Service.

The Tax Court Was Right To Deny Endicott Trader Tax Status (Recording)

October 7, 2014 | By: Robert A. Green, CPA

Join CPAs Robert A. Green and Darren Neuschwander, Managing Members of Green NFH, LLC

Click here to read the related blog dated Aug. 30, 2013.

Description: In this Webinar, we review a Word file containing the actual tax court case. We read important sentences highlighted in yellow, and discuss several comments added by Green. All options traders and other traders who manage their investments and want to claim trader tax status need to watch this recording. We added this Word file as a PDF to Green’s Trader Tax Guide.

IRS & State Tax Representation

September 4, 2014 | By: Robert A. Green, CPA

Start with a 50-minute consultation, and we will focus on the IRS or state issues raised. If we agree to represent you in a notice, exam, appeal, or tax court petition, we will email you a link to purchase our IRS or state representation service.

  • IRS and State Tax Notices – Partial Payment ($950)
  • IRS and State Tax Exam Representation – Partial Payment ($2,500)

Traders open the door to IRS and state exams by messing up cost-basis reporting and wash sale losses, trader tax compliance, and international matters. Start off by reading our Trader Tax Center page: Dealing with the IRS & States. We have the fewest traders examined and the best record in dealing with the IRS. The IRS has audited a minuscule number of our trader tax compliance clients since Congress enacted new trader tax laws in 1997. To date, we’ve had very favorable results.

After messing up their tax return filings, many traders who don’t use our tax compliance services have engaged us in tax representation services. We can’t believe all the shoddy work we have seen. Watch These Tax Errors Will Cost Professional Traders Dearly.

If you have any questions about our IRS and state tax controversy services, please contact us.

 

Dealing With The IRS And States

September 1, 2014 | By: Robert A. Green, CPA

The IRS and states have processes for inquiries (notices), exams (audits), appeals, and tax court.

Tax notices and exams

When a tax notice arrives, don’t panic and rush to reply to an IRS agent. Understand where the IRS is coming from; it may just be a computer-generated notice asking for a few simple open items. If the IRS is getting ready to challenge TTS and Section 475 MTM, it’s important to step back and make sure you have a strong case for TTS qualification and that you elected Section 475 correctly by the deadline.

Don’t expect the IRS to get it right the first time around. The IRS notice may have a hobby-loss business or passive-loss activity questionnaire, and a trading business is exempt from those rules. Agents often calculate volume, frequency, and other metrics on your trading activity to determine TTS qualification in ways favorable to them and wrong in our view, so do the calculations right.

If you made an error on your tax return, but you clearly qualified for TTS and elected Section 475 MTM on time, you may be able to fix things quickly. On the other hand, if you’re a close call on TTS and potentially messed up your Section 475 MTM election or other matters, you should consider help from a trader tax expert to be your formal representative.

Appeals

Expect the IRS agent to deny TTS unless you have a clear-cut case. Agree to disagree with the agent and go to the appeals level. Show the appeals officer how you are prepared to go to tax court to win based on the application of trader tax court cases. It’s best to have a trader tax expert CPA or attorney in your corner to present your TTS qualification, explain trader tax law, and prepare the appeals letter. Like most tax preparers, most IRS agents and appeals officers are not well versed in trader tax law, and many misapply trader tax court cases. Be prepared to negotiate in appeals but hang tough to win a favorable outcome. The appeals letter should be in a professional style that serves as a precursor to the petition to file for tax court. That will earn respect from the appeals officer, and he or she will take you more seriously.

Transfer the exam or appeals

If you work with a CPA firm well-versed in trader tax and IRS exams, it’s wise to transfer the work to your CPA office and its local IRS office. If your CPA has reviewed prior exams with local IRS agents, she probably has educated the agents on TTS, trader tax treatment, and Section 475 elections. This helps avoid problems with less informed agents on trader tax.

Tax court

If appeals deny TTS and Section 475 MTM, and your trader tax expert thinks you have a good case with a lot of money on the line, then file a petition in tax court. We usually suggest a “small case” filing. Engage the trader tax expert to write the tax court petition — preferably a tax attorney well versed in trader tax law.

See Green’s Trader Tax Guide, Chapter 10, Dealing with the IRS and States. 

IRS Exams: How To Defend Trader Tax Breaks And Win (Recording)

August 11, 2014 | By: jparasole

Join CPAs Robert A. Green and Amanda Smitson, and tax attorney Mark Feldman.

IRS tax notices often question trader tax status (TTS) and the right to deduct trading business expenses on a Schedule C for individuals or pass-through entity tax returns. The IRS figures it can force limited investment expense treatment on Schedule A and a capital loss limitation instead of unlimited Section 475 MTM ordinary business losses which are conditional on qualifying for TTS.  The IRS has recently been victorious against traders Assaderaghi, Nelson and Endicott in tax court, so we prepared some tips for other traders facing an exam. In this Webinar, we will cover:

* How to file a trader tax return without red flags.

* How to reply to tax notices.

* How to keep an IRS exam limited in scope and under control for winning. 

* Big issues like trader tax status, a Section 475 election, cost-basis accounting and IRS matching tax returns with 1099Bs from brokers.   

* How to stay in bounds on tax filings so you don’t invite scrutiny. 

* When to “agree to disagree” with your IRS agent and move on to appeals, where you may have a much better chance of success.   

* How to write a winning appeals letter. 

* The pros and cons of tax court. 

* Learn how to file a petition for a tax court “small case”, and attempt to negotiate a settlement back in appeals. 

* Who should represent you in tax court. 

* The consequences of not filing tax returns, filing late, installment payment agreements and not dealing with IRS collections. 

Handling tax compliance right significantly reduces your chances of having problems with the IRS. 

Questions and Answers.

IRS Softens Its Stance For Some Taxpayers With Undeclared Offshore Accounts

June 19, 2014 | By: Robert A. Green, CPA

IRS pressure and new Foreign Account Tax Compliance Act (FATCA) rules taking effect July 1, 2014 are intimidating Swiss banks into breaking their sworn legal promise of bank secrecy. Foreign banks are forcing American clients to turn themselves in to the IRS before the bank does so. Turning yourself in on time can lead to lower (but still very significant) penalties and no jail time.

After too many horror stories (see “Expatriate Americans Break Up With Uncle Sam to Escape Tax Rules”) about normal middle-class Americans getting caught up in this tax dragnet, the IRS changed its rules to catch and release the smaller fish. See the IRS news release “IRS Changing Offshore Programs to Ease Burdens, Increase Compliance” (IR-2014-73). Here’s the new IRS program.

“IRS Eases Up on Accidental Tax Cheats” says “The Internal Revenue Service is sharply increasing the penalties on U.S. taxpayers who hide assets abroad, while lowering or eliminating fines on taxpayers if their failure to disclose offshore accounts was unintentional, the agency said Wednesday.”

If you want to learn more about these IRS programs, consider a consultation with our tax attorney who is an expert in this area and has handled many cases successfully. Attorney-client privilege will apply.

Update about OVDI: Under transition rules, a taxpayer who entered OVDP before July 1 is entitled to use Streamlined even without opting out of OVDP. On or after July 1, a taxpayer must choose between Streamlined and OVDP and cannot opt out of one into the other. Therefore, a taxpayer who is unsure whether he would be considered negligent or willful should weigh entering OVDP before July 1. Non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.