Follow-up Accounting package for "Day Traders"

Posted by boblink on August 13, 2009, 9:28 am

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Hi guys, I am having troubling with REPLY so don't know if this was POSTED
and thought I would try a new thread.

The LP and S Corp were set up for Estate Planning and Liability purposes
not for stock "trading" purposes.

I am not aware of "special issues for S Corps that garner more than a
certain percentage of their income from passive activities, which I THINK
would include day trading", it was set up by an attorney and I have
treated it as a Passthru entity as I do with the LP so if anyone has any
further information on this
"If this guy isn't careful he could wind up paying MORE tax because of
setting up incorrectly", I obviously would appreciate if you would please
advise me accordingly.

As for accounting, I ask my clients to use Gainskeeper. I believe, if you
do
a search for the product, you'll find a free trial. It keeps track of
ALL transactions (wash sales, cost basis changes,etc)
If "all" it does is track transaction, I am comfortable with Quicken but
if it includes Accounting functions, I'll look into it

There could be benefits by changing the method of accounting, using mark
to market and sole proprietor status on Schedule C.
As I mentioned I have a LP and S-Corp NOT a sole-proprietorship. Further,
I don't have that many transaction (30-40 per year) and the portfolio is
NOT "BIG bucks"

Check out the topic Topic 429 - Traders in Securities (Information for
Form 1040 Filers)
Will do

Thanks,
Bob

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Posted by Drew Edmundson on August 13, 2009, 12:23 pm

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On Thu, 13 Aug 2009 09:28:42 EDT,
forregistry_at_yahoo_dot_com@foo.com (boblink) wrote:

>Hi guys, I am having troubling with REPLY so don't know if this was POSTED

>and thought I would try a new thread.

>The LP and S Corp were set up for Estate Planning and Liability purposes

>not for stock "trading" purposes.

>I am not aware of "special issues for S Corps that garner more than a

>certain percentage of their income from passive activities, which I THINK

>would include day trading", it was set up by an attorney and I have

>treated it as a Passthru entity as I do with the LP so if anyone has any

>further information on this

>"If this guy isn't careful he could wind up paying MORE tax because of

>setting up incorrectly", I obviously would appreciate if you would please

>advise me accordingly.

snip

The passive income rules for an S corporation apply only to
those that were formerly C corporations.

Drew Edmundson, CPA
Cary, NC

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Gene E. Utterback, EA, RFC, AB on August 13, 2009, 4:35 pm

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> On Thu, 13 Aug 2009 09:28:42 EDT,

> forregistry_at_yahoo_dot_com@foo.com (boblink) wrote:

>>Hi guys, I am having troubling with REPLY so don't know if this was POSTED

>>and thought I would try a new thread.

>>The LP and S Corp were set up for Estate Planning and Liability purposes

>>not for stock "trading" purposes.

>>I am not aware of "special issues for S Corps that garner more than a

>>certain percentage of their income from passive activities, which I THINK

>>would include day trading", it was set up by an attorney and I have

>>treated it as a Passthru entity as I do with the LP so if anyone has any

>>further information on this

>>"If this guy isn't careful he could wind up paying MORE tax because of

>>setting up incorrectly", I obviously would appreciate if you would please

>>advise me accordingly.

> snip

> The passive income rules for an S corporation apply only to

> those that were formerly C corporations.

> Drew Edmundson, CPA

> Cary, NC

As Drew as so kindly pointed out, my observation may not apply to you.
Thanks Drew - I knew I recalled something.

I would also caution the OP that it is necessary to get guidance from ALL
the disciplines that will be impacted by forming an entity. All too often
I've met with clients whose attorneys did something that was absolutely,
without question legal and also very stupid and costly from an accounting
and tax perspective.

Never get your tax advice just from an attorney when you're engaging in tax
planning - Start with your accountant. Then when your attorney says he's
finished, have your accountant review it FIRST before finalizing it (and
yes, even when you're engaging in estate planning).

As for "Advising you accordingly" - keep in mind that you are in a free and
open forum. You are free to ask pretty much whatever you like, but you'd be
a fool to rely solely on anything you get from any of us here, me included,
for several reasons.

First, I would never advise you post enough information here so that any of
us pros could give you a concrete answer. I wouldn't want that much if MY
info in cyberspace.

Second, even if you posted enough info, I doubt any of the pros here would
do all the work necessary to give you binding guidance for free. Remember,
for many of us this is our we make our livings and feed our families. The
pros who answer posts here do so as a courtesy and to help get people on the
right track, it should NEVER be construed as binding advice. And if it
isn't binding, what good is it?

Third, and perhaps most important, you have no way of knowing whether any of
the responses you get are coming from someone who is competent. I can SAY I
have whatever credentials I want, but my saying it doesn't make it so.
Before you rely on advice from anyone, me included, you need to exercise
some due diligence and make sure we are who we say we are.

Good luck,
Gene E. Utterback, EA, RFC, ABA

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Brew1 on August 13, 2009, 2:08 pm

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On Aug 13, 9:28 am, forregistry_at_yahoo_dot_...@foo.com (boblink)
wrote:

> Hi guys, I am having troubling with REPLY so don't know if this was POSTED

> and thought I would try a new thread.

> The LP and S Corp were set up for Estate Planning and Liability purposes

> not for stock "trading" purposes.

> I am not aware of "special issues for S Corps that garner more than a

> certain percentage of their income from passive activities, which I THINK

> would include day trading", it was set up by an attorney and I have

> treated it as a Passthru entity as I do with the LP so if anyone has any

> further information on this

> "If this guy isn't careful he could wind up paying MORE tax because of

> setting up incorrectly", I obviously would appreciate if you would please

> advise me accordingly.

> As for accounting, I ask my clients to use Gainskeeper. I believe, if you

> do

> a search for the product, you'll find a free trial. It keeps track of

> ALL transactions (wash sales, cost basis changes,etc)

> If "all" it does is track transaction, I am comfortable with Quicken but

> if it includes Accounting functions, I'll look into it

> There could be benefits by changing the method of accounting, using mark

> to market and sole proprietor status on Schedule C.

> As I mentioned I have a LP and S-Corp NOT a sole-proprietorship. Further,

> I don't have that many transaction (30-40 per year) and the portfolio is

> NOT "BIG bucks"

> Check out the topic Topic 429 - Traders in Securities (Information for

> Form 1040 Filers)

> Will do

> Thanks,

> Bob

well, you don't have to worry about a change in accounting methods
(mark to market) because you are not a trader, you are acting as an
investor--"day trading" requires consistent, short-term trading
throughout the year. This does not sound like a business at all, and
I doubt that the IRS would look favorably at your S-Corp if they chose
to scrutinize it. However, others here have more experience with the
creations of lawyers and hopefully they will chime in.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>