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My understanding is that I am not self-employed (or I wouldn't receive a K1, right?), therefore won't pay SS or Medicare, but must pay quarterly estimates on the passive (investment) income I receive through the partnership.

While you are correct that you are not self-employed, receipt of a K-1 has no relevance to that fact. If you were a member of an LLC that ran a business (such as a store) you could very well be self-employed.

As to trader tax questions, the main two are (1) do you qualify for trader tax status, and (2) do you use MTM accounting with regard to booking profits and losses. I think question 2 is handled at the partnership level and would only apply to me on my personal accounts, while I'm still. Question one would apply to only to my deductible expenses, as losses would be deducted on the partnership level as well. I probably need to speak with a CPA in more detail on these two questions.

Trader status is a "facts and circumstances" issue. It depends on how you trade, how long you keep your positions open, etc. There are some good resources available on the web and one reputable book, but the specific citations elude me now. My ex-trader CPA source says that you are "likely" to qualify for trader status and use MTM accounting. You will need to find someone with relevant expertise to review the specifics of your situation and advise you appropriately.

Ira


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