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stech
Level 3

Fidelity business account 1099

Does anyone have business account with Fidelity and get 1099? Can you please confirm, if that 1099 is 1099-MISC and not 1099-

i have an LLC I want to open account at Fidelity for my trading business 

10 Replies
ToddL99
Expert Alumni

Fidelity business account 1099

Form 1099-MISC is not used to report investing activity.

 

Fidelity will report your trading business (investment) activity on Forms 1099-B, 1099-INT and 1099-DIV, whether you have a business, trust, or personal account.

 

stech
Level 3

Fidelity business account 1099

But, If I have an LLC account, not personal account at Fidelity, and I get 1099B. Where will this income go on Sch C? or will it be on Sch D? 

ToddL99
Expert Alumni

Fidelity business account 1099

1099-B activity gets reported on Form 8949 Sales and Other Dispositions of Capital Assets and on Schedule D, all through the Stocks, Mutual Funds, Bonds and Other interview in Investment Income.

 

Investment income cannot be reported on Schedule C, because it is subject to different tax treatment. 

stech
Level 3

Fidelity business account 1099

I know for personal returns, it’s on Sch D & Sch 8949. 

what I am asking is when a business account receive income from Stocks. Where does that go?

ToddL99
Expert Alumni

Fidelity business account 1099

Do you have a single-member LLC?

stech
Level 3

Fidelity business account 1099

Yes 

ToddL99
Expert Alumni

Fidelity business account 1099

Your situation is complex but increasingly common. You spend enough time investing to consider it a "business" and want to deduct all expenses related to the "business".

 

Unless you made a "Mark-to-market" election, your investment gains and losses can only get reported on Schedule D and Form

8949.

 

 You can, however, deduct direct expenses on Schedule C - only expenses would gone on that Schedule C.

 

See the following excellent discussion from @bwa:

 

With Mark to Market, a Trader treats securities gains and losses as ordinary gains and losses (except for any separate investment securities they may have.)  In effect, your gains are taxed as ordinary gains and your losses are allowed in full in the year they are incurred.  

 

It's complicated to change to Mark to Market as you must also change your accounting method. See the IRS description here:  Topic No. 429 Traders in Securities (Information for Form 1040 or 1040-SR Filers) .  I would never recommend someone doing it without professional help.

For gains and losses in your situation, you would report your stock gains and losses as if you were not a day trader.  In effect, you would enter them the same as anyone else.  You would also need to create a separate schedule C (business) where you would report no income, but would deduct margin interest and any other direct costs you may occur.  Unlike an investor, these would be business expenses, not itemized deductions.

As you're moving into a complex field professional help, at least for the first year, might be in order."

 

There are many other relevant posts on the subject at  I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into...

stech
Level 3

Fidelity business account 1099


@ToddL99 wrote:

Unless you made a "Mark-to-market" election, your investment gains and losses can only get reported on Schedule D and Form

8949.

 


There are other options have to be considered day trader Sec 429. Thats a different topic. https://www.irs.gov/taxtopics/tc429

 

See the following excellent discussion from @bwa:

 

 


Can you please share the link to that discussion. that user has too many topics & hard to find it.

 

 You would also need to create a separate schedule C (business) where you would report no income, but would deduct margin interest and any other direct costs you may occur.  Unlike an investor, these would be business expenses, not itemized deductions.

my only concern is that if I report ZERO income on Sch C & report only expense, that would result in a Negative business income.  Is this okay?  I have done much of research this,  just stuck on this point if I report no income, wouldn't that raise red flags? Day trading is not a red flag, but just curious. 

 

 

ToddL99
Expert Alumni

Fidelity business account 1099

You are correct to be concerned about showing a consistent loss on Schedule C, but as a bona-fide day trader you will have a straight-forward explanation should the IRS have questions. 

 

The ideal approach is to make the "Mark-to-market election" - as a day-trader, your gains and losses would be short-term.

 

Here is the link to @bwa 's post: I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into...

stech
Level 3

Fidelity business account 1099

Everything we put on our tax return is bona-fide, unless IRS question, this is a simple reply to all of our queries.  I wanted to know, what is the IRS guidelines. 

 

Mark-to-market election is hard to get, most ppl recommend, just file  AS IS you are a day trade. I have over 700+ transaction in year, & all should be on my 1099-B

 

not now, I don't have an LLC opened. I do have over $40K gains from last year, can I post that to my Sch C as self-employed under my name, instead of LLC (I don't have one)

 

If I post all gains on Sch D & expenses on Sch C, doesn't my Capitals gains get taxed first (only on gain) then comes in my expenses which impacts ordinary income? so Sch C won't reduce my capital gains, but ordinary income

 

 

 

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