I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?

[MarilynG1]

@arweiden If you aren't able to deduct Home Office Expenses in a given year due to no business income, the amount does carry over to be used in another year, as long as the Actual Expense method is used. 

Unless you have another business location, be sure to indicate in the Home Office interview that 100% of your business income is earned there.

Click this link for more info on .Home Office Expenses. 

[Family415]

Did you mean literally have a negative linke on sch C after you enter the expense in order to carry the number to sch D;

For example, you expense many items on sch C coming out to 10K, and just create a separate line make the name like "sch C moving to sch D amount" (or something in this nature) , and put a negative number -10K.

and putting the 10K expense on sch D?

Is that what you meant? Thanks for clarifying it 

[Family415]

This totally makes sense. One more further question to you: how many years have you been doing it this way and did the IRS ever come back to you questioning about the method or like they were not clear about the approach? 

[cboizauer]

Expenses on schedule C . 

total expenses : 10k 

Carry over 10k of income to schedule C from schedule D to zero out schedule C.  

And this put a 10k loss on schedule D to account for the carryover above.  

This expenses are noted.  Income is correct (most on schedule d minus the amount carried over to schedule c to zero out expenses).  

i have done this for 3 years.  No neg response from irs.  It is the way to do it.  Greentradertax has good info on it . 

[stech]

@cboizauer 

Why mess with Sch C. Why can't I enter fake trade on Sch D and called it Day Trader Expense -10K? I am using tax software that doesn't allow negative signs in Sch C expense category.

[fanfare]

If you are a trader, you report your business on Schedule C.

That's how it's done.

If you are an MTM trader you won't file Schedule D, instead Form 4797 with attachment.

[stech]

@fanfare 

how?

Can you please share some screenshots? Thanks!!

[tagteam]

@stech 

You report your business expenses related to trading on Schedule C.

See https://www.irs.gov/taxtopics/tc429

[stech]

@tagteam  Thats true,

what they are suggesting is this: 

Sch C, Line # 18: $5,000 (positive value) and then Sch C, Line # 48, ($5,000) (negative value) to net $0 for expenses.

Then Sch D, enter a fake stock net for ($5,000) with note, from Sch C expenses?

[stech]

what options do I pick when creating the fake Sch D entry for the expenses.  Short-term? basis reports to IRS? then only enter cost and leave proceeds blank?

[cboizauer]

Short term!  Take those highest taxed gains off.  

[stech]

yes, that make sense. what about basis reported question. I selected, basis not reported on 1099 and Only enter cost without proceeds value. (to  show loss)

thank you!!

[tagteam]

Why are you entering a fake trade or trades? You report trading expenses on Schedule C.

[cboizauer]

Expenses on schedule c.  They need to be zero’d out as their is no correlating income.

Those expenses then need to come off where the income is (schedule d).  As such it should be denoted there.  Tax act and most other software works best as negative trade with the corresponding notes to explain such. 

[tagteam]

You need to use Forms Mode, but you can accomplish your objective (including the home office deduction) by following the instructions below.

For traders who claim a home office on their Schedule C, a manual adjustment must be made to show that the trader business had a gain for the year.  Otherwise, the home office deduction is disallowed.  Use the following steps to make that manual adjustment:

• In Forms Mode, go to Form 8829
• Scroll to the Line 8 Calculation Smart Worksheet
• Enter the ‘trader’ gain amount (referenced in the instructions above) on line C2

See https://ttlc.intuit.com/community/tax-credits-deductions/discussion/as-a-stock-trader-with-home-offi...