OK, so what started off as a dream has now turned into a nightmare. Long story short, I turned a small sum of money (around $3,500) into a six figure amount in about 7 weeks with options around August / September. Since the volatility went berserk shortly after that, I took some time off of options and decided to try futures. This turned out be a bad idea, and my capital was cut by about 40%. About two weeks into January, I lost everything, and I mean everything. Had I stuck with my original trade, I would have gone to new portfolio highs, but instead I went against my original plan and lost everything (sorry for the rant, coulda woulda shoulda, right?). My question is this: I will owe around $30,000 in taxes from my estimates, yet I have no money to pay this liability. Is there anything I can do in this situation? It's so irritating that had I lost the money two weeks earlier, this would not be an issue. Either way, if anyone has any helpful information, it would be greatly appreciated. If not, maybe you can at least feel lucky that you are not in my situation. :eek:
Check with the accountant but unfortunatley I have been thru the same thing. I never put money aside for taxes back in 03 when I was day trading . Then I lost it all and then some on some energy naked calls . I owed and still pay on it. I owed for the last quarter about 50k and I am still paying on it. But maybe tax laws have changed a bit since then. I had even claimed bankruptcy but that doesnt take care of taxes.
God help you. I was in the same situation. If you claimed trader status and are under mark to market accounting with the IRS, you're fine. Your net profits for the year are $0 and you won't owe any money. If not, they will tax you on your gains and you will have to carry forward your "capital losses" at the rate of 3K per year until you use it up or make the money back. I turned 5K into 85K as a teen and did not make the accounting change prior to doing so. I subsequently lost everything over the next few years. I went on an installment plan to conserve my capital that year and when I had no capital, I still owed those cocksuckers. If I had been on mark to market accounting, my losses would have been treated as business losses and carried back to wipe out my business profits from that year. I don't know with full certainty what the rules are for when you have to make that accounting change, but I do believe that it must be done by April 15th the year before you make the money. Go to the IRS website and look up trader status and mark to market accounting, it's easy to find there. I sincerely hope you don't fudged. I was, and the government can suck my dick for taxing me on money I no longer have. Wilt
Alright, I'm not an accountant but I don't see the issue. Making the numbers easy let's say you made 100k on options and lost the entire 100k on futures. On form 6781 you would show a 40k Short Term Capital Loss and a 60K Long Term Capital Loss. Short Term: On Schedule D you would show a 100k Short Term Capital Gain from your options and 40k Short Term Capital Loss. Total is a 60k Short Term Capital Gain. Long Term: You have a 60k Long Term Capital Loss from the futures. On the second page of Schedule D it says combine lines 7 and 15 where you would combine -60k with +60k and you'd have a zero balance. Like I said, I'm not an accountant. There's a reason I pay someone to do this shit. Schedule D is attached.
Well...here is something you might be interested in. I recently heard about a person who challenged the IRS stating he was not a person liable under the revenue laws of the US responsible for paying capital gains on his <b>personally managed investments.</b> From what I heard, the IRS conceded and corrected their records. Supposedly, by law, capital gains only apply to brokerages, partnerships, corporations, etc., or to individuals who's investments are managed by <b>someone else.</b> Perhaps a little research on Cap Gains Tax will help your cause. I will be looking into this one myself.
I have seen this web site referenced here regarding taxes, though I never used their service. I think someone from green actually posts on this site, but I cannot remember the user name: http://greencompany.com./
It sounds like you did not make the required estimated tax payments throughout the year. You will also probably be paying penalties... If you make $$$ in....then make and estimated tax payment by: Jan, Feb, Mar : make estimated tax payment by April 15 Apr, May: make estimated tax payment by June 15 June, July, August: make estimated tax payment by Sept 15 Sept, Oct, Nov, Dec: make estimated tax payment by Jan 15 I assume you are a cash basis taxpayer on a calendar year and did not elect mark to market. (Hint: as you make $$$, set enough money aside to make the estimated payments throughout the year and you will be ok.)