I am filing as an individual claiming Trader Tax Status (TTS) and am not claiming a 475 election. One of the issues with TTS is that all trading related expenses are deducted on Schedule C, but all income is short term cap gains on Schedule D / Form 8949. This results in a Schedule C with only expenses and no income, which can raise the risk of an audit (looks like a “hobby” business etc.).
CPAs I have talked with say that to lower audit risk, they transfer trading gains otherwise reported on Schedule D to “other income line” on the Schedule C to “zero” out the Schedule C. It’s a prevalent practice among CPAs catering to traders, even mentioned in the well-regarded “Green’s Trader Tax Guide”.
Is it possible to do this in Turbotax? Would I just not report some gains on Schedule D and instead report it on Schedule C? Taxes are the same, I just want to minimize red flag risk.
And, yes, I qualify for TTS (200+ trades a day, <1 month hold time, full-time job for five years now, etc. etc.).
