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Tk44
Returning Member

Deducting trading business expenses with an LLC

If you create an LLC for trading 1256 contracts can you deduct business expenses like subscription services you use to trade or do you have to get Trader Tax Status to be able to do that? I know normally you need Trader Tax Status but I’m wondering if you don’t if you have an LLC?

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1 Reply
RobertB4444
Employee Tax Expert

Deducting trading business expenses with an LLC

Yes, an LLC can invest in stocks and can deduct all expenses related to those activities as business expenses.

 

You will need to both establish an LLC and then have all of your brokerage statements and stock trades shown as belonging to the LLC using the federal EIN.  This involves transferring a lot of your property to the LLC so I would recommend consulting a legal professional both about structuring the LLC as well as making sure that the transfers are smooth.  

 

@Tk44 

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