If you have a Solo 401K for your trading business, read this:
Regarding the NIIT deductions; "you must ALSO modify 8960 worksheet Line 7 to report ALL of your business expenses and HO deduction as a negative number. " I should have mentioned that in addition to reporting your business expenses as a negative number on line 7, you should also be reporting your Solo 401K entries as a negative number there as well as they are exempt from NIIT.
Note: This does not apply to a trader who's AGI is under 200K.
To summarize:
- Enter your gain from your trading business on 8960 wks Line 4 as a negative number (Adjustment)
- Enter your expenses from your business (be sure to include you home based office deduction if you have one) on line 7 as a negative number
- Enter your Solo 401K deduction on Line 7 as a negative number
Following these steps will give you the proper NIIT calculations by having your trading income reported on schedule C.
