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Trader Tax Law: 2021 Mid-Year Update

Trader Tax Law: 2021 Mid-Year Update

Aired On

Jul / 14 / 2021
12:00 pm - EDT
Robert A. Green
Green Trader Tax

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.

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Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Green Trader Tax and is being posted with its permission. The views expressed in this material are solely those of the author and/or Green Trader Tax and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

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