time traders may qualify for trader tax status?
Part-time traders may qualify for trader tax status. However, if you don’t trade all day, every day, be ready for a fight from the IRS. If you have another job or business activity besides your trading business, you should be aware that the IRS might challenge your trader tax status in a future tax audit. Recently, the IRS has started to examine more traders (it has increased the number of audits across the board). The IRS has a new blessing from Congress to get tough on tax cheats, and Congress needs new revenue to balance budget deficits. Based on our experience with the IRS examining tax exams, we have noticed a new, disturbing trend from the IRS: It is challenging “part-time traders” and “money-losing traders. As an example lets say that in 2001, you had a fulltime job in California, working 9 to 5, Monday through Friday. You traded almost every morning before going to work, and you managed your trading business at nights and on weekends. You elected mark-to-market accounting for 2
