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Day Trader Deductions to offset expense from capital gain. Carry Over Expense from schedule C to Form 8949

I've been following some of the recommendations to offset trading expenses from the capital gain.  

 

I did the following:

-On schedule C, I created a row under 'commissions'.
Description: 'Carry over expenses from schedule C to Form 8949 (see line 10)''
Amount: -$2000  

 

-On form 8949, I created a new transaction line.
Box 1a -description: 'Carry over expenses from schedule C'.
Box 1e cost or other basis: $2000 

 

From what I understand, it is important to emphasize that these transactions are offsetting each other. Hence I put that as the description both in schedule C and form 8949.    

 

My concern:

-On schedule C, the description that I entered in Turbotax did not show up on the PDF form.  On schedule C, it only showed ‘Commission and Fees’ and the total amount. No description.

 

The only place where the description appears is under the ‘other expenses’.  I tried to enter a negative amount there (-$2000), but it won’t allow me to enter a negative number.

 

Here is the message I got:

‘Schedule C: Other expenses amount must not add up to a negative value.  Review entries for expenses incorrectly entered as negative values.  If negative values have been used as adjustments to reduce other line 48 expenses, the adjustment must not reduce the total below $0.  

 

So I’m so lost where to put the negative number on schedule C.

I would appreciate any advice and feedback as to solve this issue.    Thank you so much in advance for your help!

 

 

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2 Replies

Day Trader Deductions to offset expense from capital gain. Carry Over Expense from schedule C to Form 8949

I found the answer!  Sharing it with everyone.

 

Make Schedule C Look Better

 

The IRS may view a trading business’s Schedule C as unprofitable even if it has significant net trading gains on other forms and is profitable after expenses. 

To mitigate this red flag, transfer a portion of business trading gains to Schedule C “Other Income” (not revenue) to zero the expenses out but not show a net profit. 

 

https://greentradertax.com/category/trader-tax/

 

 

AnnetteB6
Employee Tax Expert

Day Trader Deductions to offset expense from capital gain. Carry Over Expense from schedule C to Form 8949

The Schedule C should only be used to report your business expenses, not any of your income.

 

Your gains/losses should either be reported on Schedule D and Form 8949 or Form 4797 if you are covered under a Mark-to-Market election.  

 

Take a look at the following TurboTax help article for more information:

 

How do I report my trader activity with (or without) Section 475(f) election in TurboTax?

 

@imanuel

 

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