According to IRS Topic 429, gains and losses from selling securities from being a trader aren't subject to self-employment tax.

[kkim]

Traders report business expense on Schedule C.  However, Turbotax computes the self employment tax on gains and I can't find a way to get rid of this self employment tax.  Anyone knows how?

[Anonymous_]

Where are you reporting your gains? 

Traders do not report gains as ordinary income subject to self-employment tax.

[kkim]

that is in fact my question.  Where do you report the gains from trading?  If I report the gain on the schedule C, then Turbotax computes the self employment tax.  If I report the gains using the schedule D, then it becomes capital gain.  I have trading expense that can be offset with the trading gain.  I was advised from the turbotax professional to report the expense on schedule C and all other trading activities on the schedule C to effectively bypass the self employment tax.  But then, the trading gain becomes the capital gain.  How come the expense is classified into business expense and the trading gain classified into capital gain? 

[Anonymous_]

Traders, without an MTM (Section 475(f)) election, report business expenses on Schedule C and capital gains and losses on Schedule D (and Form 8949 as appropriate).

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