Day Trader

[MsTabbyKats]

A returning client from years ago:

 

He became a day trader.

 

However on his 1099-B he has long term gains of $140,000.  Of course he's giving me this bs about "blah blah blah"....it's Line E.  In doing my research...I don't see any reason why it isn't long term gains.

 

Day trading (he is an official day trader) is something I have no experience in.

 

Anybody know about this???

[jlewis]

Maybe this article will help-

 

Trader vs Investor.pdf

 

[MsTabbyKats]

Thanks...but that's not the issue.

 

The short term trading is fine.  It's the long term...and he's giving me bs.

 

In about an hour I'm gonna tell him:

"Your 1099-B very clearly shows that you bought FNMA in 2009.  it clearly shows you sold it in 2014....at a gain of $140,000.  You gotta pay the tax."

And when his response is "No because blah blah blah...." I'll direct him to H&R.

 

I thought there was maybe some hidden rule......but I know he wasn't a trader in 2009 (I did his return a few years ago...and he was a security guard,)

[JohnH]

Give him time. 

If he keeps day trading, eventually he will go back to working as a security guard.

[Lion EA]

Day traders are supposed to break out their day trading from their more traditional trading.

[Lynn EA USTCP in Louisiana]

Aren't day traders supposed to file an election or special form during the year that they choose to be considered a day trader? 

[MsTabbyKats]

He made the election......

 

I figured it all out....he has this huge loss (because wash sales don't count) on his short term day trading.

 

I did separate his "traditional trading" from his "day trading".......

 

And yes John, I agree....he will be back working security before this is over.

 

According to "the rules" he's supposed to trade 75 days/year...which I told him (and he seemed to know)....just as a warning that he may think he's a day trader...but the IRS may disagree.