Tax advantages of "traders" over "investors" in securities

Article Abstract:

All taxpayers who could possibly be considered traders instead of investors in securities should take advantage of the extensive tax benefits such as unlimited deductibility of expenses and the classification as a business. As established by case law, traders must actively engage in a large volume and frequent securities transactions and derive most of their income from short-term transactions. Other advantages of this classification include taking both the standard and business expense deductions and eligibility for home office expense deductions.

Analysis, Tax deductions, Investors

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Choosing to recognize short-term, mid-term or long-term gain after TRA '97

Article Abstract:

The Taxpayer Relief Act of 1997 instituted for noncorporate taxpayers three holding periods and rates which encourage retention of appreciated property. The short-term rates mirror ordinary income rates. The mid-term rate is 28% and the long-term rate for property held for 18 months is the most encouraging at 20% and 10% for those in the lowest marginal rate. Reference to tables comparing tax savings after calculations were made using different rates and holding periods may be useful.

Planning, Capital gains tax

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Tax aspects of dying with suspended losses after TRA '97

Article Abstract:

Three types of personal carryovers or losses may be suspended at the deaths of partners and of stockholders in IRC Subchapter S corporations so that the deductions are denied to their successors in interest. These losses are treated differently depending upon the reason for suspension. Planning is possible before and after death to try to preserve passive loss deductions subject to stepped-up bases rules.

Laws, regulations and rules, Partnership, Partnerships, S corporations, Business losses

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