What kind of expenses One can deduct on Sch C as Trader (with TTS)?

[Doony]

I understand, thanks.

If my job is investor--not trader--can I write off business expenses? Or must I be a trader to write off business expenses?

[Doony]

In order to write off business expenses, must I identify myself as a trader? Or can I maintain my profession as an investor?

[RobertB4444]

Here is what the IRS says about being a Trader-

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 the trader acquires them (for example, by holding them in a separate brokerage account).

Traders report their business expenses on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship). 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 no. 703, Basis of assets. Gains and losses from selling securities from being a trader aren't subject to self-employment tax.

If you qualify as being a trader then it is absolutely a good idea to use the schedule C for your reasonable deductions.  Just be sure that you qualify.  

@Doony 

[Doony]

Thank you so much. The issue is that sometimes people fall in a grey zone.

In 2023 I placed many trades--over 1000--and mainly focused on short-term swings in the market. It is my primary source of income etc etc.

After tax loss harvesting however, about half my income was dividends / interest and not trading.

So, after selling losses, it appears that half my income is dividends / interest and half is short-term trading. As such, tough to say if I can claim trader status. Not sure there's an answer unless I try and see what the IRS says.

[RobertB4444]

I think this one is kind of on you.  You'll have to make the decision if your income is earned primarily from trading.  If you feel like it is then you make yourself a trader.  

@Doony