Are traders under tax attack on futures tax rates, hobby loss rules, trader tax status, carried-interest and financial-transaction taxes?

 

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Hosts: Robert A. Green CPA  and Mark Feldman JD     

 

Are lower 60/40 tax rates on futures in jeopardy?

Andrew Ross Sorkin wrote a story "An Addition to the List of Loopholes" for the New York Times (July 11) with quotes from Robert Green about a potential attack in Congress on perceived special tax breaks for futures traders. Green defends futures tax treatment on his Forbes blog "Hey Mr. President, Traders Need Tax Breaks Too" (July 13). Green discussed this issue to start last week's Webinar. It's unfair to say that traders get tax loopholes or breaks overall when you consider the many tax attacks on traders.   

 

 IRS hobby loss rules are a growing threat to traders.

We discussed hobby loss rules on last week's Webinar. Feldman has explored the matter further with Green. We don't think the IRS can successfully apply hobby loss rules against business traders or investors in the financial markets. So don't let the IRS deny your tax losses and business expenses (Section 162) or investment expenses (Section 212) with application of hobby loss rules. Agents are intimidating traders with the hobby loss audit program; we can help you fend them off. We covered this area nicely and it's very valuable to traders dealing with the IRS or their state on this issue.    

 

Another trader loses a tax court case.

Per Thomas Reuter's PPC, "In 2000, 2001, and 2002, taxpayer [Richard Kay] executed 313, 172, and 84 trades respectively, which the Tax Court has found in prior cases to be insubstantial. His trading activity was infrequent (29%, 7%, and 8% of the possible trading days in 2000, 2001, and 2002) and most of the shares he purchased and sold each year were held for over 30 days." In our view, Kay fails our Golden Rules for trader tax status. Green is preparing a full analysis to be published on our blog soon. In the July 14 podcast, we mentioned the important defense point of "continuous business activity" and how traders can use that to win trader tax status even if their "frequency of trades" factors are weaker than they should be. We laid out the similarities and important differences between trader tax status and hobby loss rules. This discussion should not be missed.

  

Carried-interest tax breaks for investment managers are high up on the President's list of tax loopholes that he wants to repeal as part of the debt-ceiling negotiations. We've covered the carried-interest tax debate for years. Click here to see a recent blog article. We discussed this area briefly on the July 14 podcast and tied it in with the other topics.

     

Financial-transaction tax (FTT) threat update. Click here for last blog. 

We explained that traders are perceived badly by the media and public at large and what we need to do as a community and our Traders Association to combat this prejudice.       

 

Green gives his opinion and predictions about tax discussions in connection with the debt-ceiling negotiations.

 

Each topic has value here, and the sum of the parts is even more compelling. 

I recommend this podcast! 

 

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