 here. Hey guys, welcome to the the MIC tax planning webinar where I want to introduce you to Brian. Brian's a CPA over in Orlando and he's going to be taking over this. So how we came about is Brian happened to be a member of MIC and then we're like oh my god, we totally need taxes. Everyone needs tax advice and so I've searched for many years, decades, looking for a CPA that knows trading. To be honest, to be honest, I found one or two but they are so far away and so untouchable and they wouldn't reply to me. So that's a weird thing and so when I met Brian, he's a trader and the CPA. I was like wow, you must help me and help everybody else. So I went straight over to Brian and he'll I'll let him introduce me. Hey, appreciate it, Val. Forgive my voice as well. I'm still actually recovering from Dallas. That meetup was awesome. I had a chance to meet a lot of cool traders and just talk shop, talk taxes, and have a couple drinks so it was pretty good. So but for today, what I'm going to be talking about is the 1099B which is a document that most US brokers should have distributed to you either via email or in the mail. So I'm just going to be talking about what exactly it is you need to do with this document in terms of tax compliance or quick legal disclosure. Anything that I say today should be considered educational in nature. This is not individualized one on one tax services. If you need that, I would recommend either reaching out to my firm. I am a CPA or you can reach out to your local CPA or attorney. I am not affiliated with myinvestingclub.com. They simply sponsor all of our tax content and feature it for the purposes of helping traders and investors. So some of the key deadlines that for tax year 2018 to be aware of is right now we are already passed a deadline for brokers to issue 1099Bs. So next up is actually March 15th where if you trade within a partnership or an S Corp type entity, that return is actually due March 15th. So if you don't make that deadline, an extension needs to be applied for by that date and that will extend you out until October. And then on the individual side, the tax deadline is going to be April 15th. And again, if you are not going to be able to make that deadline, you can extend it out to October 15th. With the extension, that just gives you an additional time to file. But if you do owe a tax liability, it is still due on the April 15th filing date. Excuse me. All right. So what I'm going to be talking about today is it's going to be real quick. I'm going to be talking about what the reporting requirements are for brokers versus traders. And then I'm going to show you an example of what exactly that looks like and what it means come tax time. All right. So many traders and investors cannot rely specifically on the 1099B because brokers are not required to adjust wash sales that occur across multiple accounts. So many of our clients don't just trade in one specific brokerage firm, they are spread across multiple. And so when your 1099B comes out, you may have a non-taxable wash sale adjustment on it if your broker calculated it, but it is not consolidated across multiple accounts. And so with your form 8949, you need to include the calculations across all brokerage accounts. So if your spouse also trades, then you must also calculate wash sales across those accounts. And then if you have IRA accounts that you trade in. So that's a non-taxable trading account. However, if you trade similar securities, then there are a portion of those wash sales that will be disallowed. Brokers are not required to calculate wash sales between stock and option trades or between option and option trades where you as the taxpayer, though, you are required. So if you do trade options and you also trade the underlying security, there is wash sale implications there as well. All right. So reporting rules for traders. So the IRS expects you to make any and all necessary adjustments for additional wash sales not reported on 1099B. So a wash sale occurs when you sell or trade a stock at a loss within a 30-day before or after the sale. So if you look at your trading data and you just filter by losses, if you traded that stock 30 days before that date and 30 days after, you may or may not have wash sale deferrals there. Per the IRS guidance, though, if you acquire a contract or option to buy substantially identical stock or securities, when a wash sales triggered by an IRA trade, the loss is permanently disallowed in your taxable account. So one of the strategies that we do use is if a trader is set up in an entity, we make sure that the entity accounts, the active trading accounts, sit in that entity account. And then if you do trade in an IRA type account, we actually move that outside of the entity, which sits in your personal name, so that way you can trade and earn tax-free. So here's a quick real-life example of a trader who essentially triggered a wash sale right at the end of the year. So in tax year 2018, a trader bought and sold anywhere between 505,000 shares of the same stock over and over and over. So at the end of the year, his net profit was $10,000. So on December 31st, that trader liquidated all of his shares and took a $120,000 loss. Therefore, his net loss totaled $110,000, so that's net of his gain. So he could have stopped right there, and for some reason he did not. So what do you think happened on January 1st, 2019? Well, his entire loss of $120,000 was disallowed for 2018, and he ended up having to a net gain of $10,000, where he would pay tax on that. So that wash sale that occurred during the end of the year is now deferred to future years. So it's really key to make sure that if you are under investor status that you're watching, especially around your end, you're watching your trading activity, but an easier way to circumvent this is to elect mark to market accounting, which all your trades will then be reported on Form 4797, and you are no longer subject to wash sale treatment. All right, so the Schedule D. The Schedule D is going to be the document that tells your story. And so the total of all of your trades across all brokerage accounts, your total sales proceeds are actually going to flow through here, in this column right here, where nine times out of 10, if you're trading equities, this is going to be in the millions, sometimes billions depending on how big you trade. And then your cost basis is going to be in the very next column. Now, when you subtract your proceeds from your cost basis, that's what actually gets you to this net gain column. Now, if you are under investor status, then obviously there's going to be a wash sale calculation, deferral that's going to go here. And then when you calculate it across the board, your new gain will be net of any wash sales occurred. So this will be the summary of all of your trades. And then each individual trade will then need to be report on Form 8949, which is going to be right here. I know that's small, I apologize, but so each and every single trade will need to be reported to the IRS. So it's not uncommon for a trader to have essentially, you know, two to 3000 pages of trades. But just all this needs to be documented. And it essentially needs to tie back to what's reported on your schedule. So a lot of guys, you know, they start doing it and then they say, man, this is this is a lot of work or how do I get my trades in this form or in this format? And so that's kind of where we come in. And we require all of our clients to export a CSV file, which, which entails all of their trade history. So we go ahead and do all the wash sale calculations. We draft 8949 into the schedule D. And then we also draft the individual tax return. So that's actually basically it. So if you are under investor status, obviously you're going to be on Form 8949. But if you elected a timely mark to market election, your reporting is going to be a little bit different in the sense that it's actually just going to go on a form 4797. So if you have any questions, feel free to ping me in. If you're part of Slack, you can definitely the MIC chat can ping me there. If you're part of any of our tax planning services, you can reach out there. I talked to a lot of the guys in the MIC tax planning Slack workspace. You can shoot me an email. We can schedule a consultation. You know, this time of year, the calendar is filling up fast. And so if you do have questions, just feel free to shoot me an email info at trader tax CPA dot com. So that's all I've got. I'm actually going to turn it back over to bow. And then maybe I'll stick around for maybe one or two questions, but my throat is killer. All right. Thanks, Brian. I wanted to show you guys this before we know now hope that I mean, that was just a little bit of information that Brian wanted to give. I want to show you where they actually tack up where you can get more information. So you go to our website, and you go to tax planning. Yeah. So here are the packages that Brian offers. Once again, I don't do these taxes. Brian owns a firm that does all this and we just recommended services this. So for as little as $219 a year, you can you can get all your questions answered. So Brian can probably talk more about that about these plans. Brian, you want to talk about quickly, but these plans and then we can wrap it up. Yeah. So the base plan is awesome because there are a lot of guys who actually are either CPAs or their traders or they are comfortable doing their own tax work. And so they sign up for the base plans because they just want to bounce a couple of questions off of our firm. So this is awesome because it's it's in the form of a slack workspace. And they essentially ask as many questions as possible. And I'll get back to them usually within 24 hours. And then, you know, kind of once tax season slows down a little bit, I'll start doing a little bit more content development. So we'll do webinars and things like that. And so for the individual trader plan, so this is for all the clients that are essentially, you know, their traders and they may have a W2, they're married, they've got a couple things going on. And so we'll prepare your individual taxes. But it does not include any additional businesses. So that's outside of the scope of this. And then for the business trader, this is essentially for the guy who trades within an LLC. Maybe it's taxed as a partnership or an S corporation or, or, you know, entity like that, then we'll prepare the entity and the personal return. But again, that's just limited to the trader business and then any other, you know, W2s 1099s, things like that that you may have. And then for the entity solution setup, we actually subcontract with a legal or with a law firm out here in Orlando, where they essentially assist in setting up entities in your home state. They draft all the operating agreements, anything legal related. And what we'll do is we handle all the tax planning. So whether you need to make the mark to market election, S corp election, things like that. Great. Thanks, Brian. Yeah. My advice to everybody is April's coming right around the corner. Everybody loves to wait until the exact last minutes, including myself. So in my opinion, my, my recommendation would be to plan it early because a lot of times I hit up my CPA and my CPA doesn't even have time for me. So my, my advice is we are like a month out. So use this opportunity now to start planning. I hope Brian has enough staff to handle the last minute stuff. So my advice is just to go and look into this mirrorly. Also for the MIs, go ahead, Brian. Yeah, I was going to say, too, is that if anyone signs up probably after the March 15th date, we're automatically going to, or actually March 14th, we're automatically going to put an extension in on those clients. And they may or may not meet the April 15th deadline just because, you know, there's, there's a lot of people online now. So, yep. So, um, so Brian, Brian is in MIC. And once again, you do not need to be an MIC member to use this service. Okay. Brian, Brian owns his own firm. He's, he's over in Orlando. So, um, you do not need to be an MIC. We offering this as a recommendation because we feel like there's nobody else that does this. And I really feel like he's really helping us out. So thanks, Brian. Um, we're going to post this video on YouTube. If Brian, uh, where can they find out more information? So all the information's are here. So anybody that wants to hit up Brian, what, what should they do, Brian? Um, they can actually hit me at info at TraderTaxCPA.com. They can shoot me a DM on Twitter or they can reach out to me in the MIC chat. I'm actually, I'm looking at MIC chat now. It looks like there's, um, like three or four questions. Um, so I'll go ahead and address those before we get off. Do you want to take some questions? Maybe do a minute? Yeah, let's go. I got about eight minutes. So I'll let you take, I'll let you take over. Okay. I want to meet myself. Okay. So it says, can you file for mark to market and not being an entity? Yes. So if you're an existing taxpayer, your mark to market election needs to be done with your personal return. And that's going to be, uh, the due date is April 15. So your mark to market election, which is form three, one, one, five needs to be filed with your personal return. And it also needs to include, if this is not your first year of trading, it also needs to include what's called a section 481 adjustment. So yes, you can still make the election. Um, what's the benefit of trading under an entity? Um, there's multiple benefits. Essentially, you know, there's the 20% QBI deduction that you can get. If your household income is below a certain threshold, you could potentially qualify for it, but if you're a high earning trader, you may or may not get that. Um, the second benefit is if you trade through like an S corporation, you can create earned income in the sense that you need earned income to unlock, um, IRA contributions, health insurance contributions, things like that. So that total deduction can run in the range of about 55,500 for the IRA piece and then depending on how much you pay in health insurance. And then it's also a separate taxpayer. So it's outside of your personal return. And then it makes life a little bit easier in terms of your personal return. And then if you were ever selected for an audit, your entity return is, is a separate taxpayer. So that's, that wouldn't even be included. They would just only have access to your personal information. Um, what is the minimum amount to file taxes for trading? Whether you have a gain or loss, all of your trades do need to be reported. So, um, profitability is not, um, a requirement. If I were to have, that's an important, that's an important thing. I want to, uh, uh, point out, because when I started trading, I was losing money. I didn't think I needed to report it since I lost money, but that's wrong. They're going to ding you, right, Brian? Unless you file exactly. So yeah, if, and it's a benefit to you too. So like if you're carrying losses, um, you know, they'll still, it'll still offset other sources of income. And if you qualify as a trader, then you could potentially get business expense treatment and write off all of your business expenses. And so, you know, just because you're running a loss, it's not the end of the world and you can actually use it, you know, to your advantage. And one other thing is, um, his services, the CPA services are tax deductible and MIC itself is tax deductible. Yep. So it'll be, it's tax deductible in the year that it was incurred. So if you signed up for MIC in tax year 2018, then the portion that you paid for that service would be deductible, um, for your 2018 tax. And then anything incurred this fiscal year would be included on your 2019 tax return. Great. That's, uh, thanks a lot guys. I think we're, we're going to end it here for more information. You can email Brian. You have anything else, Brian? Nope. I'm good to go, man. All right, man. Take care. We're all sick, unfortunately. Uh, so, so this is good, man. Since everything's tax deductible, this is in my opinion a no-brainer. So I'll see you guys next time. We're going to post this up on the YouTube for anybody that missed it. Thanks guys.