Tax Planning/trading


QUESTION: I do day trading. When my broker account balance increases (but I do not put it into my own bank account) is that considered income?

ANSWER: Al - The answer depends on a number of factors.  Is day trading your business that you do regularly?  If so, there is a mark-to-market election that should be made to treat your income as a business and include it in your ordinary income.

Income, in this case would be the difference between the price you pay for a position and the price you sell your position for.  Account balance is simply a daily tally of your "inventory."

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QUESTION: I do it regularly / daily. So if my account balance with my broker increases but I do not take any money to put it into my bank account is that considered income?

The fact that you move it to your bank account, in and of itself, does not make it income. What makes it income is totaling up how much you paid for each position and how much you sold it for. Think in terms of your positions like inventory. You buy your products for one price and sell it for another. The difference is either a profit or a loss.  

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As an Enrolled Agent, I am fully capable of providing tax advice as it relates to personal and business income taxes. Enrolled Agents are the only Federally licensed tax practitioners and are admitted to practice before all administrative functions of the IRS. My specialty is working with small business owners who file Schedule "C" and helping them to structure their business in such a way as to maximize as many tax advantages as possible. I also enjoy working with individuals who have both routine as well as complex tax situations. I prefer to concentrate on individuals and small business tax planning.


I have a 25 year background in financial services including tax, bookkeeping, insurance, real estate and securities. I was previously the Chief Financial Officer of a local and national franchise organization. I am currently semi-retired, but used to own (in partnership with another EA) an individual and small business financial engineering firm where I work with nearly 2,500 individuals and small business owners in nearly every state and almost every continent, assisting them in all aspects of their tax and financial well-being. I have prepared or reviewed more than 8,000 tax returns in my career.

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Enrolled Agent, Admitted to Practice Before the IRS, Accredited Tax Preparer, Fellow of National Tax Practice Institute, Certified QuickBooks ProAdvisor (1999-2011), Sleeter Group Certified QuickBooks Consultant, Life & Disability Insurance Agent License (California, Texas, Maine), Real Estate Agent License (California); Many years of continuing education in all these fields.

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