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

PODCAST

What’s next for potential CPA licensure changes

A new model proposed by NASBA and the AICPA is designed with an eye on the future for newly licensed CPAs. The AICPA's Carl Mayes, CPA, provides background on the project and a look ahead to 2020.

VIDEO

What RPA is and how it works

Robotic process automation is like an Excel macro that can work on multiple applications, says Danielle Supkis Cheek, CPA. RPA can complete routine, repetitive tasks such as data entry, freeing up employee time from lower-level chores.