Looking for help from a tax attorney or cpa or if someone has already done this and could give me some better advice about the creation of an LLC and trading under the LLC. My problem is that for the last 4 years I have had significant loses that far exceed the capital loss write offs of 3,000 dollars. I want to see if I can some how write off more then 3,000 dollars a year against my w2 taxable income. If there anyone other there that could help me or give me some insight that would be awesome. I want to continue my trading career but its tough not being able to get any tax write offs and the 3,000 dollar a year isn't cutting it. Please help!!

You cannot write off more than the 3k a year however two things

1. The 3k a year can be continued indefinitely if you completely stop trading
2. The losses carry onwards so that you can negate future capital gains with that losses and trade tax free in future winning positions

That's extactly why I need to register an llc and trade in that apply for mtm election


This post was edited by Novaboston on Feb 11 2025 04:06pm

U don’t need an llc for either of the above. As long as your capital losses have been documented appropriately, they will follow you

I think what he is hoping is he can trade within the LLC and since he is losing a substantial amount of money he is hoping that he can claim whatever the total loss was in his LLC against his personal income and thus circumventing the 3K limit per year.

I don't know the American system well but I believe that is what he is seeking to do.

In Canada that wouldn't work, and not only would it not work it would be a disaster since trading income in your corp is seen as investment income and taxed at the highest corporate rate and you can't take that loss in your incorporated business and use it to offset personal tax, it can only carry forward within the business itself to write off future income earned within the corp.

But America, I am not so sure. There seems to be some indications that you could take LLC losses and apply them against your personal income, but I suspect the IRS has considered trading losses within an LLC and people doing this and has created a rule that does not allow you to skirt that 3K limit so easily. But not worth my time to dig into since its never going to be applicable for me or the few people I help out.

This post was edited by SBD on Feb 12 2025 02:27pm

not possible, even if his income was exclusively 1099 work in his LLC

Capital losses cannot mitigate llc/1099 work

Trust me I know this having myself desperate for a capital loss solution in 2019

But if you learn from your mistakes those losses will give you benefit in years to come as you become profitable in the market

Same here in Canada, indefinity forward, or alternatively you can carry 3 years back. That's what I did with my Disney position.

Edit - Up to 3 years back.

This post was edited by SBD on Feb 13 2025 09:52am

Disney lol, this ticker was the biggest bait for years

I sold it end of last year so it should start going up now

This is extactly what I'm asking I trade alot of the same stock and scalp so wash sales are a thing but if your mtm election wash sales don't apply and you can claim unlimited losses against your gains and get over that 3k a year. I'm wonder if I can use those losses against my w2 personal income since I'm single member llc its a pass thru entity.

forcing capital losses to make gaisn in taxes can keep you from qualifying for a mortgage in the future if you use those returns to qualify