More on Day Trading

BY DALE SCHWARTZENHAUER

I believe I can offer a very clear and concise method the courts could take in the day trading arena ( “Day Trading and Self-Employment Taxes” [ JofA , Jan.01, page 80] ).

Since the primary question is what constitutes a trade or business, that determination could be made based on whether one holds a securities license.

Before the advent of day trading, the only “real” traders were brokers or dealers in securities. In addition to meeting various state requirements, those individuals qualified under either NYSE or NASD rules to become licensed. The modern-day traders meet no such requirements because they do not deal with the public. I think this distinction alone can determine whether the activity constitutes a trade or business, or is an investment activity.

Unless a distinction is made along some similar line, numerous court cases could be decided on either side of the argument for years to come.

Dale Schwartzenhauer
Jim Johnson & Co.
Walla Walla, Washington

SPONSORED REPORT

Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.

QUIZ

News quiz: IRS warning on cyberattacks and a change in pension rules

Once again, the IRS sounds the alarm about a threat from cyberthieves. See how much you know about this and other recent news with this short quiz.

CHECKLIST

Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.