How To Set Up A Trading Business (Valuable Tax Benefits!)

In this video, I'm diving deep into the nitty-gritty of what it takes to establish yourself as a bona fide trader in the eyes of the IRS.

This is essential knowledge if you want to navigate the tax landscape smoothly and maximize your deductions as you set up your trading business.

What You'll Learn:
- Number of trades as an active trader
- Entity Structures
- Tax Benefits
- Asset Protection

🔔 Don't forget to subscribe for more insights on real estate investing and business strategies!

Show Notes:
0:00 Intro
2:37 Avoid Tax Court
5:15 Write-Offs
8:11 Structure Your Trading Business
14:35 Thinking About Your Estate
18:01 Get The Best Tax Benefits
20:57 Final Tips
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The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice.

#daytrading #trader #tradingbusiness

[alphadoom]

This is exactly how I had it planned in my head. I'm coming into a large inheritance and setting up the proper structure is crucial to legacy growth. My son, and my wife will be working in the corporation doing different avenues of wealth generation. Essentially, I'm a good trader and I've been trading for 7 years, however, I have a background in Real Estate and we plan on buying multi-family properties, run a property mgmt firm, run a maintenance company for rehab and repair, run a title company... The list is long. Suffice to say, this structure of having the C-Corp Management at the top and then verticals is how we are structuring it. I've been concerned about distribution from the profits on trading, so this helped tremendously, as do some of the comments here! Thank you for sharing this knowledge!!!

[ddubsr]

Please make a video that lays out the left side of the blackboard. Deserves to be more expanded

[samvalle]

FIrst time caller, long time, (one month) listener. This video has been the most informative one I have ever seen. Thank you so much!

[Lou_Snuts]

The corporate management company can have the shareholder as an employee.

Corporate income can be generated by both management fees and the corporate share of the LLC's income.

The corporate entity can then pay hire the shareholder/employee and also set up a 401(k) plan, where the employee can defer the maximum allowable deferral, plus have the corporate entity make a matching contribution (up to the combined statutory maximum) and effectively negate a substantial portion of the corporate income.

As a result, a large portion of the net investment income (ordinary dividends, qualified dividends LT & ST capital gains) can be sheltered from current taxes.

For qualified dividends passed to the corporate manager, they get an 85% DRD at the corporate level also.

Whatever income is left in the corporate entity can be distributed as a qualified dividends to the shareholder/employee, taxed at 15%, assuming that salaries have been sheltered in the 401(k) plan.

Also, as an employer, the cotporate entity can set up a health plan, correct?

All WITHOUT having to trigger a "personal holding company" designation.

I presume that this is the optimal effect.

[iAmNotImpressedd]

As a US-based future trader, we are trading using proper firms, basically funding companies. How do we qualify for the tax advantages and does the model that we are on fit the structure you just explained can we still trade with these firms and have it respected or it’s not our money could it be seen differently?

All the other benefits you mentioned with C corporation is excellent. We just wanna make sure that since majority of us are trading with prop firms.

[tfox]

This video was very enlightening, my only question is why the C Corp and not the S Corp to avoid the double taxation?

[betterbreed]

As someone who trades Futures, I'd love to know how to purchase things such as a vehicle or home/apartment with funds from my future trades. I trade full time so I don't have any employment history for said purchases. Any info on this would be highly appreciated!

[bseagle]

Detailed, thorough information for TTS. It's NOT so easy as many assume; unless, the stated parameters are met. AVOID tax court! Err on the side of safety

[mrprfct]

I had to liquidate stocks at a $100k loss in order to close on a real estate deal, timing is everything. That real estate property is now worth over $400k more than i acquire it for. However, I still incurred that 100k loss earlier in the yr. My thought was to hopefully gain some ground later on and I did. I was lucky enough to make a $80k gain that year so my carryover loss was $20k but I also gained $400k equity somewhere else.

[NA]

I still don’t understand why we have to set up two entities, one for expenses, and one for trading? Can we still have the same benefit of using only one LLC in the trading?

[jrubino]

Great information to come upon! Currently own a sole LLC and need to plan for continued success. I just scheduled my 1st consult with your team.

[bond-yieldbond]

would the LLC doing the trading also be a c-corp to get 21% flat tax rate? also could you go over Accumulated Earnings Tax and the Personal Holding Company Tax?

[zdrux]

Can you recommend anyone that does this according to Canadian tax law?

[dogcatfish-zs]

This is extremely interesting, you said “perpetuating wealth in a legacy for your family” so are you making the section 754 election to the partnership LLC (brokerage account) to preserve the step-up in basis upon death for inheritance? If not how else can you preserve this benefit as it’s essential for estate planning?

[Financed__]

What happens to the investment expenses, which are non-deductible on Schedule A under the 2% miscellaneous deductions, in the context of a stock partnership? What is the proper treatment for these expenses? Thank you for the excellent presentation!

[rgeyser]

Very informative. Question re: futures trading. Tax treatment for futures for individuals is 60% long-term / 40% short term. Is that lost if it is done through a LLC? (If so, the benefits of using a management company to manage a LLC that trades futures may be outweighed by the higher tax rate in the LLC.)

[lisnafulla]

Great video. Quick question. Where does the Investment LLC (taxed as a partnership) take the deduction for the management fee paid to the Family Office LLC?

[JustForFunM]

Hi Toby. Can the Stock LLC elect mark to market in anyway, or will it be able to avoid wash sale rule?

[masterj]

Does this structure work if you have VC investments, real estate, crypto trading, crypto staking and stocks trading?

[hwnwhaler]

Mahalo! I’m going to watch this a second time, so much good information.