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twistedether
Level 3

Can I have two businesses - one my retail business and the other as stock trading to claim my expenses?

This is for tax year 2019. In 2019 right from the beginning of the year, I had a small food business plus I traded heavily last year.  I had gains from trading and losses from food business.  I am wondering what is the best possible way to maximize my deductions.  Can I claim as I was trading actively and hence be able to deduct the expenses incurred from investing fully, while also claiming deductions from expenses in operating the food business?  What do I have to have in place to do something like this?  Does this arrangement have any disadvantages?

2 Replies
SusanY1
Expert Alumni

Can I have two businesses - one my retail business and the other as stock trading to claim my expenses?

Yes, you should file these separately as they are two different business activities. The expenses for the one would not be the same as the expenses for the other.  Just be sure your trading activities meet the IRS criteria found here: Tax Topic 429.

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Rick19744
Level 11

Can I have two businesses - one my retail business and the other as stock trading to claim my expenses?

You can certainly have more than one trade or business, but being able to claim trader tax status is not to be taken lightly; this is a highly scrutinized area.

I have attached two links for you to read regarding trader status for tax purposes.

For the first link don't get hung up at the beginning as it discusses "potential" changes in the tax law.  This was written pre TCJA, but the premise regarding trader tax status is good material to read and understand.

https://www.forbes.com/sites/greatspeculations/2017/06/07/how-to-become-eligible-for-trader-tax-stat...

The second is IRS Publication 550 and chapter 4 discusses traders.

https://www.irs.gov/pub/irs-pdf/p550.pdf

As you will quickly understand, this status is based on facts and circumstances.

*A reminder that posts in a forum such as this do not constitute tax advice.*
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