Great comments so far,

Thanks all for taking time to type them up.

Question 1:
So, what is the most tax efficient way to trade stocks?

In the past, I've always traded with little thought
about tax implications of what I was doing.

Each April I made sure my SchedD was accurate and did
not think much past that obvious point.

And now a change of subject...
The first thing I need to study are different types
of retirement accounts.

I'm not all that well informed. For example, I'm a bit
fuzzy about the difference between a 401k and an IRA, and a
Roth IRA.

Question 2: What are some obvious tax advantages to
different types of retirement accounts?

Let's assume I'm 40 and I have 100k in the bank and I make
100k/year as an employee of a large corp. and they match 50%
of my 401k contributions into a portfolio of mutual funds up
to ... I forget. I think its $5k.

-moi

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ir4u4[at]yahoo.com (Equis Uno) wrote:

- quote -

Look up the tax rules for "personal holding companies".
Using a corporation to hold your personal investments is a
personal holding company, and it is taxed at punitive rates.
Paying taxes in the 39.6% bracket on all your profits is not
most people's idea of "tax efficient".

And operating a Nevada corporation from California gives you
the bonus of paying Nevada fees as well as California
franchise tax.

[remainder of bad advice also snipped]

--
Chris Green

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Equis Uno wrote:

- quote -

Wrong. The corp. will get hit with the income tax on it in
the meantime....

- quote -

That didn't bother you?

- quote -

There's a 6x9 gray room with your friend's name on it
waiting for him.

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- quote -

"The guy at work" better not quit his day job. He is wrong
on each issue you mention.

As to using the corporation to protect your assets, that
depends on the type of lawsuit and what your corporation
will do. Overall, you will get very little protection if you
are a service business. If your service biz is separate from
your investments, then all any lawyer would have to do is go
after your personal assets I.e. your ownership of the other
corporation.

If you are really worried about being sued, get liability
insurance.

Gary

--
You can probably X figure out X which letters to X delete to
derive my email address X.

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Equis Uno wrote:

- quote -

Oh yeah!

the only guy who will make money on this deal is the
attorney.

'nuff said.

Cheer$,
Harlan Lunsford, EA n LA

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ir4u4[at]yahoo.com (Equis Uno) writes:

- quote -

If you sell and realize the gain, it'll be income to the
corporation. If it's an S-corp, that income passes through
to you. If it's a C-corp, the corporation will have to pay
corporate-level income tax. So no delay of taxation. And
C-corps have higher marginal rates than individuals.

And *very* importantly, read up on the "personal holding
company" rules, which can cause further corporate-level
taxation.

- quote -

Which is no different than what is true for an individual
taxpayer -- except capital losses that a corporation has
expire after 7 years (if my memory serves correctly), while
they do not expire for an individual.

- quote -

One very important asset couldn't be the Nevada corporation
-- your shares of stock in the corporation!

While it's true that someone suing you personally *may* not
be able to directly attach the corporation's assets, they
certainly could:
(a) attach your shares in the corporation,
(b) having taken control of the corp by attaching
your shares, sell off the corp's assets and
get their money that way.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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Fellow taxpayers,

Suppose I have some savings which I'd like to invest in
stocks.

According to 'A guy at work', I'd be wise to setup a Corp in
Nevada, and trade through that corp.

He says that if stocks go up, I can keep the money in the
corp and I may legally delay taxation on that money until I
get it in the form of dividends.

If stocks go down, the losses may accumulate year after year
and be used to offset gains in later years.

Also, he says that it would be easy for the corp to write
off trading expenses such as computers and software.

Also, losses from a wash sale cannot be considered a loss
for an individual but that rule does not apply to
corporations.

What turned me off to the whole idea is that he gave me the
number of an attorney who can 'help me'.

I'm a conservative guy; I don't want to get mixed up in
something dodgy and I don't mind paying my share of taxes.

I am curious though.

One thing that does appeal to me is that if I were to ever
get sued, all of my assets would be in an NV corp.

I'm making plans to start a service based corporation in CA.
Small businesses in some ways are sitting ducks to evil
doers so I want to have my assets kept in a safe place.

Comments anyone?

-moi

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