Qualifying for Trader Tax Status means you can convert the current capital gain/loss into ordinary gain/loss. Thus offsetting a trading loss against other current income or carrying it forward as a net operating loss. Deductions of capital losses against other income is limited to $3000 per year.
Make the Trader Tax Status election for 2019 by declaring it with a new entity (this is much easier as it only needs to be internally documented) within 75 days of formation or for sole props by declaring it by April 15, 2019 (a form 3115 will need to be filed with your 2019 return). Be sure to understand the amount of trading it takes to qualify for Trader Tax Status. The IRS has not yet decided whether a 475 election will apply to coin however if you qualify then make the election just in case. Sec 475 income will qualify for the 20% QBI deduction for pass thru entities (subject to AGI limitations). Claim Trader Tax Status by taking full sec 162 business expenses on your tax return.
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