Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 09-21-2012, 05:40 AM
Junior Member
 
Join Date: Sep 2012
Posts: 1
Long term capital gains rate for active trading LLC

Hello,

Suppose Investco LLC purchases $10,000 in various call options (on various underlying stocks) that will expire within the tax year. Most expire worthless, for a short term loss of $8,000. The remaining $2,000 worth of options purchases are exercised, and the underlying stock (in ABC corp) is held for more than one year.

Can the individual owner of Investco LLC deduct the entire $8,000 against ordinary income, and still expect to pay the reduced capital gains tax rate on any gains for the ABC stock that was held for more than one year?

Thanks in advance,
lukedog



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 09-22-2012, 04:52 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,231
“Can the individual owner of Investco LLC deduct the entire $8,000 against ordinary income, and still expect to pay the reduced capital gains tax rate on any gains for the ABC stock that was held for more than one year?”-------> LLC owners are not referred to as shareholders, but as members. A member’s share of ownership in the LLC is determined by the LLC’s operating agreement or by some other document that outlines each member’s ownership interest. You can recognize a STCL of $8k in the tax year. You net the LTCG/STCL and yo got Net capital loss of $6000;$8K(Net STCL)-$2K(Net LTCG). You can use $3K in the current year assuming you have at least that amount of income , ordinary income; the STCL is offset, on a dollar for dollar basis, against ordinary income for amounts up to $3K in the year. you can carry forward the remaining $3K indefinitely.
In 2008–2012, the tax rate on qualified dividends and long term capital gains is 0% for those in the 10% and 15% income tax brackets. After 2012, the long-term capital gains tax rate will be 20% (10% for taxpayers in the 15% tax bracket).



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
S-corp loss offsetting long term cap gains Budlite Capital Gains 2 04-05-2011 11:39 PM
Long term disability taxes Stamkos91 Income 3 03-12-2011 04:24 AM
2008 Capital Gains & Qualified Dividends Tax Rate SurferDude Capital Gains 0 09-13-2008 01:16 PM
Capital Loss in Trading rweworld Capital Gains 3 03-27-2008 10:06 AM
How long to wait to avoid higher capital gains tax? debby Capital Gains 1 09-28-2007 08:55 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning