The National Directory of Certified Public Accountants

Ask A CPA - Day Trader

What Are Some Benefits Of Being Classified As A Day Trader ?

A Day Trader can classify his or her activity as a business reported on IRS Schedule C. This business is not limited to a annual capital loss limitation of $3,000. There is no limitation to the losses that may be incurred by Day Trader's business. Expenses for such things as computer equipment, supplies, margin interest, or software that might have been limited to 2% AGI limitations on IRS Schedule A can now be taken in full on IRS Schedule C. Also, a Day Trader may use the market-to-market accounting method for his or her portfolio. This will allow recognition of gains or losses before the gain is realized on the sale of the security.

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