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Does anyone have TTS using SPX strategy only?
According to Green Tax's website, qualification seems pretty tough https://greentradertax.com/trader-tax-center/trader-tax-status/how-to-qualify/
"We recommend an average of four trades per day, four days per week, 16 trades per week, 60 a month, and 720 per year on an annualized basis. Count each open and closing trade separately, not round trip. Scaling in and out counts, too."
Suppose I were to put up 6 spreads (2 legs per trade) on Monday, Wednesday, and Friday of each week. Would this count as 12 trades on each day for a total of 36 trades in one week? Or is this only 3 trades total?
If you have TTS, please share your experience on how you received it and defend it in the eyes of the IRS?
Thanks!
I run my options trading under the wrapper of a business (limited partnership), so I have all the business write-offs already.
The Section 1256 mark-to-market applies to TTS, businesses and personal investors alike.
But I'd be curious if anyone does this through the TTS.
@earlyretirementnowcom
Can you explain how that works? According to Green Tax, individuals that go through entities must obtain TTS before they can enjoy any of the tax benefits of the entity, including limited partnership -- this is how I understand it to work.
@charlie02 Currently, I don't claim TTS. I don't need the wash sale and unlimited tax loss write-offs from capital losses. But on the LP level, I can write off business expenses against income that I generate with various investment ventures, among them the put trading. Every business can write off expenses against income, I don't need to be a TTS. As I said before, everybody can use Section 1256, not just TTS.
But I might still consider doing the TTS route because there are some benefits that sound quite attractive (20% qualified business income (QBI) tax deduction). My put trading certainly generates enough volume to claim TTS status. Last year I traded on about 190 different days, 1,000+ individual transactions, all very short-term trades.
@earlyretirementnowcom
Yeah, TTS through entity also offers health insurance and retirement plan contributions - not sure if these are things you're interested in.
Edit: thanks for sharing your trading volume. By "individual transaction", do you mean each put you open is one transaction, close is another, and batches of two or more are separate transactions?
@charlie02 I opened 1,000 individual trades and roughly 2 contracts per trade. I counted only the open because the close is done automatically at expiration. The expiration "trade" might still count as a trade, though, but even without it, I should be well over the minimum. 🙂
@earlyretirementnowcom
Awesome, thanks for sharing. I don't know if expiration counts as a trade, but if you do 1k+ per year, you definitely have enough trading for TTS.
Business write-offs?
Thanks