I live in Colorado. Can I collect unemployment insurance, and manage stocks that I may eventually pay capital gains taxes on (at the end of the year)?

tkdally3 — Sat, 01 Jun 2019 06:49:08 GMT

Would the IRS consider me to be a sole proprietor during the time of capital gain, and my State expect, in that time frame, for me to have paid into unemployment insurance tax?

It is unlikely that you would qualify as a "Trader" and b...

DDollar — Sat, 01 Jun 2019 06:49:10 GMT

It is unlikely that you would qualify as a "Trader" and be treated as a sole proprietor. According to the IRS:

Special rules apply if you're a trader in securities, in the business of buying and selling securities for your own account. The law considers this to be a business, even though a trader doesn't maintain an inventory and doesn't have customers. To be engaged in business as a trader in securities, you must meet all of the following conditions:

You must seek to profit from daily market movements in the prices of securities and not from dividends, interest, or capital appreciation;
Your activity must be substantial; and
You must carry on the activity with continuity and regularity.

The following facts and circumstances should be considered in determining if your activity is a securities trading business:

Typical holding periods for securities bought and sold;
The frequency and dollar amount of your trades during the year;
The extent to which you pursue the activity to produce income for a livelihood; and
The amount of time you devote to the activity.

If the nature of your trading activities doesn't qualify as a business, you're considered an investor and not a trader. It doesn't matter whether you call yourself a trader or a day trader, you're an investor. A taxpayer may be a trader in some securities and may hold other securities for investment. The special rules for traders don't apply to those securities held for investment. A trader must keep detailed records to distinguish the securities held for investment from the securities in the trading business. The securities held for investment must be identified as such in the trader's records on the day he or she acquires them (for example, by holding them in a separate brokerage account).

Traders report their business expenses on Form 1040, Schedule C (PDF), Profit or Loss From Business (Sole Proprietorship). The Schedule A limitations on investment interest expense, which apply to investors, don't apply to interest paid or incurred in a trading business. Commissions and other costs of acquiring or disposing of securities aren't deductible but must be used to figure gain or loss upon disposition of the securities. See Topic 703, Basis of Assets. Gains and losses from selling securities from being a trader aren't subject to self-employment tax.

For additional information see IRS Topic 429 - Traders in Securities

topic I live in Colorado. Can I collect unemployment insurance, and manage stocks that I may eventually pay capital gains taxes on (at the end of the year)? in Investors & landlords

I live in Colorado. Can I collect unemployment insurance, and manage stocks that I may eventually pay capital gains taxes on (at the end of the year)?

It is unlikely that you would qualify as a "Trader" and b...