JoeD_CPA_CFP
Employee Tax & Finance Expert

Self employed

Hello MB1991!,

 

Yes, you can create an S-Corp and use it for trading. There is a NAICS code 523110 for this very purpose. I know that many online brokers allow you to create trading accounts for corporations. You may be required to call or download the application rather than just apply online as an individual would. The brokerage houses require corporate formation documents and minutes to authorize the opening of the account.

 

Read this article to make sure you understand the rules and elections surrounding trading. Also, read the article below to make sure you qualify for professional trader status. Make sure you understand the mark to market rules as well. Professional trader status

 

As far as a reasonable salary, that is a very subjective determination. I have read that 25% to 50% of an S-Corp's net income is often used as reasonable although I cannot assure you that the IRS will agree. Here is a link to the IRS.Gov explanation of reasonable compensation.

 

Here is the link to the Qualified Business Income Deduction so you can know the background information related to the QBI. Also, here is How Traders Can Get The 20% QBI Deduction Under New Law  I found that addresses this very issue.

 

Full disclosure, I have never prepared a professional trader's tax return.

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