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News items:

Free money (guaranteed until 12/6/2012):
$25+ for Traders' pre-2007 monitors

Day Trading buying power limited
with ETF's effective 12/1/09 - p. 4

IRS targets taxpayers

IRS does not  fully understand the
business model for traders - p.67

Internet taxes are almost here

IRS rules sloppy bookkeeping

IRS now auditing S-corporations
as part of a tax evasion study

IRS Notice 2008-1 re: S-corp. owners (PDF)

IRS is not charging interest

IRS sued for civil rights violations

Officials agree - Richard Ney
was correct

Social Security statement online

IRS Refund information:
Where's My Refund?

Free money:
Where's my unclaimed property?

IRS Historical Documents relating
to Alphonse (Al) Capone

Ameritrade Apex accounts
have built-in GainsKeeper
 trade matching for free.
Separate Wash Sale and
Mark-to-Market reports included.

Note: Effective January 2011
TD Ameritrade retirement accounts
are allowed to be designated as
margin accounts without the need
to form a separate LLC to hold the
title to the account.

Other brokers offering
GainsKeeper (some charge a fee):
AB Watley
ChoiceTrade, as of 3/1/2005
IB Interactive Brokers, as of 3/22/2005
MB Trading, as of 3/22/2005
OptionsXpress, as of 2/21/2006
Zecco Trading , as of 6/4/2007
Firstrade, as of 2/5/2009
New trade matching rules starting in 2011

Zero commission trading:
Zecco Trading - 10/month

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  Copyright© 2014 Colin M. Cody, CPA and, LLC, All Rights Reserved.
Trading and U.S. tax policy quotes...
Supply and Demand of marketable securities: Shares are shrinking by about $70B or $80B a month between actual buy-backs and cash takeovers of public companies. We have $25B on average of new offerings, so the float shrinks by about $45B a month. As long as owners of stock have more money chasing fewer shares... the market's up. - Charles Biderman, TrimTabs Investment Research (8/28/14)

I think there is a real possibility there is a pause in the Taper this year, maybe sooner, than later. Which again is an indication as to why maybe rates have come down, If there's weak jobs numbers beyond even this weather related, if we want to call it that, the Fed's coming the the rescue. - Scott Martin, United Advisors (3/6/14)

I think this Market is ready to Rip!  ...and that's only because I'm speaking to foreign investors and they're looking at the world and saying the U.S. is the safest haven right now. - Maria Bartiromo (3/6/14)

If for some reason the market breaks out from these channels, the market could head up in parabolic fashion which could lead to a massive run up that could last a month or two. That is the good news; the bad news is that parabolic moves never have a happy ending as we saw in March of 2000. - From a Proprietary Market Report (3/6/14)

Raise cash now. I expect a huge selloff in equities. But do not short the market because it could go higher in the short-term. - Mark Spitznagel (3/4/14)

Based on my study of demographics (which includes the ongoing retirements of the Baby Boomers) the Dow Jones Industrial Average will to rally to 17,000 in several weeks, followed by a downward slide or crash that ends in 2016 at Dow 6440 - Harry S. Dent (3/3/14)

MyRA savings accounts will be developed to be offered through employers to those employees with family income no greater than about $191K. The deposits into the myRA are not tax deductible, but the growth in the myRA is tax-free. Once the balance in the myRA reaches $15K it needs to rolled into a Roth IRA. The myRA accounts are a very low-risk investment in dollar-constant U.S. Gov't backed securities - Pres. Obama State of the Union speech (1/28/14)

Effective March 1, 2014 any entities with an EIN that file tax forms 1065, 1120 and so forth and even some Schedule C filing businesses are required to file IRS form 8822-B within 60 days of a change of address or identity "of the responsible party" or a change of the address or location of "the business." - IRS  instructions for form 8822-B

There will be some sharp pullbacks in the market. The first decline will probably be a 10% to 15% decline and we think very likely to happen in the next six to nine months. - Joe Duran, United Capital Financial Advisors (1/3/14)

Net Investment Income Tax CAUTION for traders and some other taxpayers for 2013 tax returns:  Perform this simple test - Add up just the positive amounts on your tax form 1040 lines 7 through 21 and if this sum exceeds $200K for singles or $250K for marrieds, then manual computations may need to be done to override standard tax return preparation software computations. And as a further CAUTION, to the extent there was any netting of losses or expenses to arrive at a given amount listed above, redo this test by eliminating those losses or expenses and see if the new summation then exceeds the $200K or $250K level.  Once a taxpayer exceeds this level of positive income, the Net Investment Income Tax for 2013 may apply. And then to make matters a bit more complex, there is a taxpayer's choice: either the old proposed rules from 2012 or the new final rules for 2014 may be used for the necessary 2013 computations. Please search this page for "1411" and using the Google search above search this web site for "1411" to find additional information. - Internal Revenue Service (FAQ)

Retail stock brokerages will be reporting publicly traded CBOE stock option gain/loss computations to the IRS beginning with positions opened after January 1, 2014. - Internal Revenue Service (effective 1/1/14)

The International Monetary Fund is raising its forecast for U.S. economic growth after Congress struck a budget deal and the Federal Reserve said that it would begin to taper.  We see a lot more certainty for 2014, so all of that gives us a much stronger outlook for 2014, which brings us to raising our forecast. - Christine Lagarde, IMF Managing Director (12/22/13)

I've watched this stuff for 40, 50 years now, and this the first time in my memory when it seemed to be official U.S. Gov't policy that the stock market goes up.  And the Fed likes this, because it thinks that when the stock market goes up people who own stocks feel richer; they'll go out and spend more money and the unemployment rate will come down. - Richard Sylla, NYU Stern Markets Historian (12/21/13)

We are in a legitimate bull market because for the first time this century, we have all five of these in place: 1) Major issues in the news are resolved positively 2) Profits are bountiful 3) Companies create value, such as increasing dividends and declaring stock splits 4) Job market improves 5) No inflation. - Jim Cramer (12/20/13)

We like MA and VISA, but you have to remember that these are a hedge against our undisclosed short portfolio of other payment processors, who we think are on the wrong side of the technology curve.  Overall the risks are rising and we're finding a meaningfully larger amount opportunities on the short side at the end of 2013 than at anytime since '06-'07. - Jim Chanos, Kynikos Assoc. (12/19/13)

Tapering to begin at a modest pace at this time. $75B rather than $85B per month.  The Fed rate for interest will remain unchanged at least until "well past" a date when the jobless rates have dropped below 6.5%. - Fed Chairman Ben Bernanke (12/18/13)  The stock markets initially crashed, followed by a stunningly strong rally minutes later.

The top 40% of U.S. taxpayers paid 106% of the nation's tax burden for 2010.  It could be said that contrary to many pundits, the rich not only pay their full share... but they actually pay everyone's share. - Congressional Budget Office report issued in December 2013

This is the most extreme monetary policy we've had in 100 years. It doesn't make sense with the employment rate coming down ... to keep extreme measures in place. Logically the Federal Reserve ought to begin to reduce bond purchases at its meeting next week. - David Kelly, J.P. Morgan Funds Chief Global Strategist (12/6/13)

Interest rates will go rapidly up to 4% and then as high as 6% if the tapering is actually consummated and that's why I believe there will be no consummation of the tapering.  Therefore invest in anti-dollar investments as the dollar goes much lower due to a failed tapering. - Michael Pento, Pento Portfolio Strategies (12/5/13)

Bureau of Labor Statistics, Employment Situation for November's new hires could be well above consensus.  I am expecting a 210,000 to 230,000 rise in employment. - Billy Greenblatt, Sterling Infosystems (12/5/13)

When the Fed taper happens (most likely during the first quarter of 2014) the market will be set-back 5%.  At that time - buy equities (but do not touch bonds).  If the taper results in panic and the 10-year Treasury yield goes up to 4%, the U.S. will enter a recession. - Jim McCaughan, Principal Global Investors (11/26/13)

Very lengthy final IRC §1411 regulations for 2014 (T.D. 9644 [alternative link] & REG-130843-13) cover the 3.8% Affordable Care Act related investment tax / trader tax IRC §1411. The final regulations adopt, after a number of changes, the 2012 proposed regulations REG-130507-11.  For the transition year, 2013, taxpayers may generally use (within reason) either set of regulations as long as they do not "inappropriately distort" the intent of the law for tax years after 2013.  Trader expenses are more-or-less fairly re-configured in a way that for most traders will offset 3.8% of tax but are prevented from any tax benefit that would result in any so-called double-dipping.  The new rules are complex and will necessarily require manual overrides and manipulation of tax return preparation software. - November 26, 2013

IRS crack-down on self-directed IRAs - Form 5498 for 2014 differs from the 2013 form in order to prepare trustees for a future requirement to separately report the value of nonpublicly traded investments, including closely held LLCs and real estate. This information will provide the IRS with potential audit issues to go after.  Mortgage Interest form 1098 is going to be changed to report the loan balance, origination date and property taxes paid to help IRS determine when a taxpayer is over-deducting on home equity lines over $100K and original mortgage debt over $1MM. - November 2013

The Wealth Effect (a greater perception of wealth results in more spending, which often results in a more rapidly growing economy) has not returned to the levels of the pre Housing Crash days. Therefore not all of the 2013 gains in the stock market and in housing are being spent, and so that leads me to believe that the Fed Policy is harming savers and is holding back a couple percent of GDP.  But I am not convinced that the Fed will ever taper; we may just go into the next crisis, depression... (Long MU and TPX, short GMCR and CMG)- David Einhorn, Greenlight Capital (11/21/13)

Q. Will the 2013 Fed Policy be reversed, possibly beginning with tapering in early 2014?  A. No, while the Fed may try to test the waters from time-to-time, if interest rates were to rise appreciably higher, then the U.S. economy would either go into hyper-inflation (if Congress rapidly accelerates needed high interest rate borrowing to cover the higher interest cost) or would go into a depression and in an extreme case would revert into potential anarchy (if Congress curtails borrowing and spending). Reasoning: If interest rates rise even by a few percentage points, that could result in a doubling or tripling of the U.S. debt service costs.  With that much allocated to covering debt service there would be significantly less available for discretionary spending and even for some other so-called mandatory spending (Medicaid, SNAP, U.C., etc.).  Therefore, to avoid these apocalyptic risks, the Fed is trapped into maintaining low interest rates for the foreseeable future. - TraderStatus (11/21/13)

It's imperative that the Fed begins to taper. We've seen real bubble-like markets again. - Larry Fink, BlackRock, world's largest money management firm (10/29/13)

If short-term interest rates exceed the 10-year bond yield (Inverted Yield Curve) this would indicate a turn into recession.  Monetary Policy, Economic Cycle, Valuation & Sentiment are at 70% (of my proprietary formula) showing that the S&P is undervalued by 15%. - Elaine Garzarelli (10/10/13 with S&P at 1690)

The 2013 holiday season is going to be horrific for the department stores; for the apparel retailers.  AAPL, KORS UA, NKE and TJX are going to take a lot of dollars out of other retailers' pockets.  A new paradigm: when you take AAPL, Samsung, WMT and AMZN they are taking more than 50% of the growth in retail and that's going to accelerate as you get into the 2013 year-end holiday season. - Steve Kernkraut, Durbar Capital (10/10/13)

Crude oil volatility peaks approximately every 32.3 months (roughly in two to three year cycles).  It is now 31 months since April 2011 when the WTI-Brent price variance spiked - and that was 32 months after a major round of volatility that topped out in July 2008. If the oil price volatility is oscillating in a repeating two to three year cycle, then we can expect to see another wave of instability in oil prices occur in late 2013 or early 2014.- Tom Therramus (10/7/13)   After (or with) recent declines in WTI, the volatility has begun and many stocks such as EOG, PXD, VLO & XEC seem to be following the action [real time price of WTI].

Sell Everything! - Joe Granville, (RIP 9/7/13)

Be fearful when others are greedy... and greedy when others are fearful. - Warren Buffett

The average investor in the market is a blind man crossing the street. He can’t compete with professionals. - Richard Ney

Trees don't grow to the sky. - Louis Rukeyser

There is only one side of the market and it is not the bull side or the bear side... but the right side. - Jesse Livermore

To me, the tape is the final arbiter of any investment decision. I have a cardinal rule: Never fight the tape!. - Marty Zweig

A person can succeed at almost anything for which they have unlimited enthusiasm. - Charles Schwab

It always seems impossible ... until it is done. - Nelson Mandela

Never go on margin until you have mastered the market, charts and your emotions. Margin can wipe you out. - Dan Zanger

There are two systems of taxation in our country: One for the informed and one for the uninformed. - Judge Learned Hand

There should be tax increases. Speaking personally, I think there are a lot of very rich people out there whom we can tax. - Sen. Barney Frank (youtube)

Collecting more taxes than is absolutely necessary is legalized robbery. - Pres. Calvin Coolidge

The most dangerous thing you can do to any businessman in America is to keep him in doubt, and to keep him guessing on what our tax policy is. - Pres. Lyndon B Johnson

Our tax code is so complicated, we've made it nearly impossible for even the Internal Revenue Service to understand. - Treas. Paul O'Niell

I have wondered at times about what the Ten Commandments would have looked like if Moses had run them through the U.S. Congress. - Pres. Ronald Reagan

The only thing that saves us from bureaucracy is its inefficiency. - Sen. Eugene McCarthy

Looking for tax deductions?

Short-term trading is fast... exciting... profitable... challenging... and tax deductible!

When you tally up your results each year - do you see the capital gain tax taking away too much from your hard won trading profits? As an active trader do you find that you have too little time at the end of the day to do the necessary tax planning to avoid paying excessive income taxes? What is the real story behind all the talk about the tax benefits from choosing trader status and electing mark to market?

When is a CPA firm needed?

Serving Traders for over 20 years!        We'd Like to hear from you

Here at we will bring together in one place the information necessary to help you survive unnecessarily high short-term capital gain taxes, self-employment taxes and state and federal income taxes. To accomplish this, often a separate trading entity is the answer, but just as often we avoid it as not being cost effective in a particular situation.

Many traders do not yet even realize that they are paying far too much to the Federal Government. Existing, proven legal procedures, which in many cases can significantly reduce taxes each and every year, are available to anyone qualified to elect to use them.

As we all eventually learn, those low capital gain tax rates of 15% or lower are not available for the daytrader's lightning fast trading profits. Rather, an individual daytrader's gains (or losses) are subject to the higher ordinary income tax rates!


Investors and securities traders may incur substantial costs with on-line fees, commissions, real-time data-feeds, computer equipment and so on. The Internal Revenue Service, on their own, do not treat most taxpayers very fairly when it comes to deducting these expenses. Leaving it up to the IRS publications and instructions, at best, a taxpayer must first qualify to itemize his deductions on Schedule A - making those deductions subject to a 2% of Adjusted Gross Income (AGI) reduction and for some high-income taxpayers even an additional 3% of AGI reduction.

Please take the time to read and understand the information found on our web site and also on the
Discussion Board as it can be very helpful to you when preparing your taxes and when planning your tax strategies.  Every month we hear from taxpayers who found this web site too late or after they already paid someone for a download that contained nothing more than the basic information here available to you for free.  Taxpayers who were ill-advised by normally very competent CPAs and other tax practitioners, but for whom the tricks and traps  of Trader Status were unknown to them.

A good CPA does not need to know everything, he only needs to know where to look it up when a problem arises, or when he's doing your tax planning.  Unfortunately the hard facts are that, when it comes to traders in securities and traders in commodities, many tax advisors have no clue that there even is a Trader Status issue to look up, let alone having the practical hands-on experience necessary to be aware of the tricks and traps to be found!

Proposed IRS Regulation 1.1411-5 targets gains from securities traders, futures traders and forex traders for imposition of the 3.8% surtax. IRC §1411 - November 30, 2012

Odds of being audited:
1:8 taxpayer earning over $1MM were audited in the past year.  1:25 are the odds for individuals earning greater than $200,000.   1:100 for people earning less than $200,000.  1.6MM tax returns were audited, out of 141MM form 1040 returns filed.  8 out of every 10 audits resulted in additional taxes being assessed.  Corporations: 1:100 odds for those with assets under $10MM. -  derived from IRS announcement, January 5, 2012

For 2014 as has been the case starting with 2011, taxpayers with any financial account maintained by a foreign financial institution or any securities issued by someone that is not a U.S. person may be required to file IRS Form 8938 along with their regular income tax forms. Taxpayers are subject to a $10,000 late filing penalty and the burden of compliance for some European institutions is too expensive and will result in closing accounts held by U.S. citizens. -  derived from IRS announcements, January 2012




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Help is out there for those qualifying taxpayers whom are active enough to file with the IRS as a TraderStatus
Taxpayer. Under Trader Status an electing daytrader may deduct all of his ordinary and necessary expenses. And for taxpayers filing under Trader Status they do not itemize those expenses on Schedule A (but yes, they may even take the "standard deduction" in addition to all their "trader status" expense deductions). Since a trader does not "itemize" daytrading expenses these are not subject to the 2% limitation, the 3% limitation, or many of several other restrictions the IRS places on the average investor!

Want to learn more about using TraderStatus on your tax return? 
You've come to the right place! 
Come inside and look around where you'll find:

A basic overview accurately describing the law pertaining to Traders, Investors and Dealers and the Mark-to-Market election.

Order form to receive additional more detailed TraderStatus information which can be invaluable when doing your own tax return, or for providing the information necessary to defend yourself during an Internal Revenue Service Tax Audit.

Educational (and therefore tax deductible) Trader Books and Audio Tapes.

Stock trading spreadsheet for manually keeping track of your trading on a day-to-day basis.

Instructions to retain Professional CPA support for a personal one-on-one telephone & email consultation to discuss your own unique tax situation.

Retainer payment form for:  Tax Return Preparation; Mark-to-Market election preparation; Correcting prior errors made when traders fail to file the required IRS elections properly & timely; Using the correct forms, and applying the current appropriate tax favored theories as they apply to you on your own tax return;  or for Representing you in front of the IRS if you're being examined under field audit or mail inquiry.

Much more in tax counseling and tax planning strategies is available starting on our order page, from the TradersTaxPlan  to a full service engagement. Techniques as sophisticated as you need them to be will be custom designed for securities trader and commodities trader clients.

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