Trader Tax Law: 2021 Mid-Year Update

Join Robert A. Green, CPA of GreenTraderTax, for tax developments impacting traders, including entities, a SALT cap workaround, and President Biden’s tax hike proposals on investors.

• A new entity qualifying for trader tax status (TTS) can elect Section 475, providing an exemption from wash sale loss adjustments, the $3,000 capital loss limitation, and eligibility for a 20% QBI deduction. In addition, an S-Corp can deduct health insurance premiums and a high-deductible retirement plan like a Solo 410(k). Mid-year is an excellent time to consider a new TTS entity,
• An entity might offer a SALT cap workaround to circumvent the $10,000 limit on state and local itemized deductions.

Biden’s tax proposals in Treasury’s FY 2022 Greenbook curtail long-term capital gains for taxpayers making over $1M and closes the carried interest tax break for fund managers earning over $400,000. However, Biden’s Greenbook does not offer to remove the contentious SALT cap, and it retains the 20% QBI tax deduction. In addition, it does not propose a financial transaction tax.

Disclosure: Green Trader Tax

This information is educational. Where specific tax advice is necessary or appropriate, you may wish to consult with a qualified tax advisor. Robert A. Green and the Green companies are not affiliated with Interactive Brokers.

IRS Circular 230 Notice: These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor.

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