Happy Veterans
Day. In honor of service to our country, we offer
free consultations and trader tax guides to veterans, for a limited
time and quantity. Please contact customer service within the week
to take us up on this offer. Thank you.
Conference Call & Podcast This Week:
Thursday,
Nov. 11, 4:15 - 5:30 pm ET
Dial 312-878-0224, Access Code:
603-682-315
An mp3 streaming podcast will be available after the call. Click
here for podcast archives.
Topics: We
have covered many of these topics before but include updates for
this week below.
Important Forex
Tax Update:
We are working on a major update to our forex tax treatment
research and content, which will be published on our blog soon.
Don't get alarmed, we expect that our new conclusions will confirm
prior challenges on spot forex tax treatment and support our prior
stated conclusions too. We continue to believe that retail spot
forex contracts in major currencies may qualify for lower 60/40 tax
rates in Section 1256g (foreign currency contracts), riding the
coattails of interbank forward contracts - after making a valid
opt-out election from Section 988 (foreign currency transactions).
The new CFTC forex trading rules may help our case, since the CFTC
Chairman's "Gensler letter" implies that the term "spot forex" is a
misnomer since it's "futures-like."
Learn
about our current tax research, latest take on problems in these
positions, new IRS and tax court challenges, and more. Our tax
attorney Mark Feldman JD and other attorneys in our industry are
leading this charge.
We
plan to offer forex traders revised "substantial authority" tax
opinion letters to support their forex tax treatment. Several large
forex traders asked for these opinion letters because they and
their tax preparers want peace of mind on their tax filings and
protection from potential tax penalties. Current rules require
"substantial authority" which does not mean it's a guarantee to
win.
As
pointed out on prior calls and blogs, some forex traders are
considering currency futures since - after the new CFTC forex rules
-- the leverage is similar to retail spot forex, plus the lower
60/40 tax rates clearly apply to futures. In last week's blog, "Is
U.S. forex trading safe?",
we pointed out that the NFA recently fined some retail forex
brokers for abusive practices on their software trading platforms.
Why take a risk on spot forex tax treatment if you can trade
currency futures instead? It's not that simple, of course, and
there are many other factors to consider.
As
we have indicated, spot forex isn't specifically mentioned by the
IRS and court cases as being specifically allowed in Section 1256g;
only forwards are mentioned, hence the risk in tax treatment.
Recent court cases and IRS revenue ruling 2007-71 barred forex
options from Section 1256g because they don't require settlement
with the currency; the option holder could decide not to exercise.
Forward forex contracts require settlement in physical currency and
we argue that spot forex does too. We have many other arguments --
this call is just a taste of the big picture issues.
There's a lot at stake tax-wise. Remember, with lower Section 1256
60/40 tax rates, the maximum blended tax rate is 23 percent, a
whopping 12 percent less than the current maximum ordinary tax rate
of 35 percent. Forex traders are counting on GreenTraderTax to
defend their 60/40 tax treatment on spot forex.
Year-end
tax planning:
Click here for
Robert Green's blog article dated Oct. 19, 2010. Green's Forbes
blog version.
Brinksmanship and partisan talk continues in Washington DC over
extension of the Bush tax cuts. Early reports from the deficit
commission are touching the third-rail of politics (social
security) and that may heighten the tax, spending and deficit
cutting debate, leading to further gridlock in the upcoming
lame-duck session.
Look out for tax tricks in this game of tax chess, too. Democrats
still seek to de-couple the Bush tax cuts, making the middle-class
cuts permanent and extend them for the wealthy for two years. But
this is a trick: When the cuts expire before the 2012 presidential
election, President Obama will continue his argument about not
wanting to expand the deficit to pay for rich tax cuts. He will
call Republicans hypocritical about deficit reform. It's obvious
Republicans will therefore not allow de-coupling.
Another tricky idea: Tie the tax cut extension period to major new
tax reform. After the Obama health care reform debacle, who
believes this type of major bi-partisan reform is achievable,
especially if it's wed to comprehensive reform of the deficit and
spending crisis?
I hope Congress extends the Bush tax cuts and the AMT patch quickly
in the lame-duck session, and it works out comprehensive tax,
spending and deficit changes before the next election.
We need to do our year-end tax planning despite any tax-change
drama. We still have time to execute plans before year-end and
we're hoping Congress and the President will act sooner than
later.
Read our latest blog on year-end tax planning and we suggest that
you get
started with our
CPAs at GreenTraderTax on what's best for you. Every client's
situation is different.
New
CFTC forex rules went into effect on Oct. 18th
for RFED accounts. Foreign banks have an extra 270 days to comply.
We will continue discussing the fallout from these rule changes.
Several foreign brokers claim to be banks to have 270 more days,
but they aren't banks; as brokers they're now unregistered
non-compliant counterparties for forex transactions with
Americans.
Financial-transaction
tax (FTT). A FTT of
every form and stripe for those desperate for funds worldwide is
back on the radar screen. Advocates continue to be unions, the
Robin Hood Foundation and the UN.
After the Fed's QE2 bombshell felt around the world, "hot money"
issues in emerging markets are becoming a real concern for many.
Several emerging-market countries like Brazil, Korea, China,
Thailand and others are talking about or have already passed
capital controls to slow down hot money inflows. Brazil and a few
other countries are passing FTTs, in the form of a toll on money
inflows only. I hope Congress doesn't consider Fed QE money to be
hot money in the U.S.
Dodd-Frank
Fin Reg changes. Republicans are talking about repealing or
limiting Dodd-Frank Fin Reg, along with repealing or de-funding
Obama health care reform. The Dodd-Frank Volcker Rule --
restriction on prop trading and bank hedge funds -- is being
debated again. I noticed several large banks had a "perfect"
quarter (per the WSJ) in trading this past quarter, delivering
important profits, buttressing their fledgling recovery.
President Obama is selling the provisions of Dodd-Frank Fin Reg at
the Seoul Korea G-20 meeting this weekend, and there may not be
many takers or followers. What's going to be the fate of Dodd-Frank
now? Many Dodd-Frank provisions for investment managers don't take
effect until July 2011, so there may be time to reassess.
Investment
management business.
Entities and retirement
plans. There's still sufficient time in 2010 to form your own
trading entity and related retirement plan to save more taxes this
year.
Don't forget our important year-end strategies with new entities.
You can form an entity ASAP and either elect Section 475 MTM or not
by year-end since it's within the 75-day election period for new
taxpayers (new entities). If necessary, you can use a do-over
entity in 2011. It's a big gamble navigating your way out of a
large capital loss hole and our entity strategies are the answer.
Learn more about this strategy on our entity
formation page.
Our consultations with Robert A. Green,
CPA are on promotion until Nov. 30, so consider discussing your
issues with him soon.
Hosts:
Robert A. Green, CPA/CEO of GreenTraderTax,
GreenTraderFunds & Traders Association, and Brent Gillett, JD
of Investment Law Group of Gillett Walker,
LLP.
We greatly appreciate your support in joining our Traders Association by paying
$50. Please visit our Traders Association Web site
section to learn more.
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Upcoming Trade Shows and
Webinars:
Trade
Shows:
Attend Green's classes at the Las Vegas Traders Expo Nov. 19.
Online Webinars:
CyberTrading
University (11/9)
OptionsXpress
(12/7 and 12/14).
Contact the above companies to receive an invitation. Be on
the look out for invitations to some of these events too.
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Greetings!
If you have any questions, please contact
our customer support at 888-558-5257
(toll-free in US only), or 646-216-8061
(worldwide), or by email to
info@greencompany.com.
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Tax Preparation &
Planning:
Preparation and planning of federal and state income tax returns
for traders (retail, proprietary, and hedge funds [both individuals
and entities]) is our core business. Click here to learn more about
our tax preparation and planning services.
Now is a good time to
get started on year-end tax planning.
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GreenTraderTax
Guides:
The Tax Guide for Traders (McGraw Hill 2004
hardcover & pdf). Comes with free updates in our login
area.
2010 GTT Guides: 2009 Tax Return Examples for Securities Traders
and a separate examples guide for Commodities, Futures &
Forex/Currency Traders (online). We also have an Accounting
Guide.
Green's 2010 Trader Tax Guide.
Upgrade:
If you purchase our 2010 Platinum Package after Oct. 15, 2010, you
receive a free upgrade to the 2011 versions of the same guides
included in the current Platinum Package below. Our 2010 guides
have 2009 tax return examples, and our 2011 guides will have 2010
tax return examples. So you are now purchasing both 2009 and 2010
tax return examples. This is the product you will need come Q1 2011
when you are preparing your 2010 tax returns.
Our hardcover book covers important tax information, and although
trader tax laws haven't changed significantly since 2004, there are
many important new strategies, dos and don'ts, tips and tax law
changes included in Green's 2010 Trader Tax Guide. The hardcover
book covers the basics and the 2010 guide covers the latest updates
and strategies. |
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Tax Center:
See our articles on trader tax, MTM, entities, retirement plans,
tax treatment, securities versus futures, forex, precious metals
versus base metals, global tax, non-resident alien traders, IRS
exams, and much more.
Blog:
Robert Green writes about many hot topics for traders including tax
law changes, trader tax, proprietary trading, real estate losses,
and more. Robert Green is
now blogging on Forbes.com too.
Tools:
We are also pleased to offer our users and customers this tools
section, including general tax, financial and business resources.
This tools section is the only area of our Web site that is powered
by a third-party company, and they do an excellent job.
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Consultations:
After you read, view and listen to our leading content about trader
tax, forex tax, tax changes, entities and retirement plans for
traders, hedge funds/advisers, and proprietary trading firms, you
will probably have some good questions for our Robert A. Green,
CPA.
PROMOTION: $25-off
regular 30-minute price for Oct. 27 to Nov. 30,
2010.
Click here to
learn more or purchase and schedule a consultation.
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Trade Accounting Software &
Services
Our trade accounting software (and our accountants too if you need
help in that area) can handle your trade accounting needs.
TradeLog� for GreenTraderTax.
Learn more how TradeLog is much better than any other program
for active traders.
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Webinars, Radio & Trade
Shows:
Most are archived so you can take these Webinars anytime you
like.
Plus, due to popular demand, several more Webinars with Green are
coming soon from most of these companies.
- NYC & Vegas Traders Expo
Classes
Join Green in Las Vegas on Nov.
19, 2010.
- CyberTrader Univ.
- MoneyShow.com (many educational
videos, Webcasts and interviews with Green)
- FXCM & DailyFX.com
- CBOT
- optionsXpress
- Lightspeed
- DTI
- Vince Rowe Radio Show
- NYS Society of CPAs
- Rockwell Trading
- TraderInterviews.com
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