I'm running about a half a million in a taxable account in California, mostly selling short-term option premium, about half of which is Sec. 1256, the rest equity. I fear my tax bill? Anything I can do? Or just suck it up and try to get more Sec. 1256?
Don't know about Cali, but, generally, if you set up a corporation, partnership, etc., you've just made that entity pay the tax, rather than yourself. For federal income tax purposes, corporations are subject to a 21% tax rate, so if Cali follows that system you might save some money initially... but keep in mind if you ever take your profits out that will be subject to a second tax, possibly at a 37% rate. And that 21% rate could be going up in the near future thanks to our good business-friendly friend who was just elected president. So be forewarmed...
Depends on your structure. And if you arent dumb, you can avoid double taxation. Also having a biz lets your write a ton of shit off to offset it. Playing the tax game is how you get wealthy.
Well, sure, when they are pass-through entities. I am asking how to pay flat Corp tax AND avoid double taxation. @BMK, any suggestions?