Message Font: Serif | Sans-Serif
No. of Recommendations: 0
Suppose I have an IRA and I daytrade in it excessively (say 100 trades or more per day). I read somewhere that if the IRA is used as an active trading vehicle, then you are not adhering to the spirit of an IRA and the IRS can declare that it is not an IRA (i.e., the trades are taxable). Anyone heard of this? Or was I misinformed?


PS - Wash sales and IRAs? I looked at previous discussions about this and one of the last ones I read said that if you sold a stock for a loss in a taxable account and bought it back in an IRA within 30 days, that there is no wash sale. Can this advice be trusted or is this topic still undecided?

Print the post Back To Top
No. of Recommendations: 0
"Suppose I have an IRA and I daytrade in it excessively"

I have never heard the IRS disregarding the IRA because of excessive trading. You, as the IRA owner, get no current tax benefits from the activity within the IRA. Any money that is distributed to the IRA owner is ordinary income.

I think the issue is can a person take the expenses, such as research etc., on the Schedule C as daytrader yet not have any stock trades becasue all of the trading is done in the within an IRA.

My opinion is no. These are investment expenses deductible on the Schedule A.

As an IRA owner you do not own the stocks the trustee of the IRA does. The trustee is doing all of these trades that is why it doesn't show up on your return. Daytraders are trading their own capital assets (stocks) or business assets (stock with the mark to market election). None of the assets within an IRA are either of these to you.
Print the post Back To Top