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September 15, 2016

Frazer LLP

Hi There,

If you invest, whether you’re considered an investor or a trader can have a significant impact on your tax bill. Do you know the difference?


Most people who trade stocks are classified as investors for tax purposes. This means any net gains are treated as capital gains rather than ordinary income.

That’s good if your net gains are long-term (that is, you’ve held the investment more than a year) because you can enjoy the lower long-term capital gains rate. However, any investment-related expenses (such as margin interest, stock tracking software, etc.) are deductible only if you itemize and, in some cases, only if the total of the expenses exceeds 2% of your adjusted gross income.


Traders have it better in some situations. Their expenses reduce gross income even if they can’t itemize deductions and not just for regular tax purposes, but also for alternative minimum tax purposes.

Plus, in certain circumstances, if traders have a net loss for the year, they can claim it as an ordinary loss (so it can offset other ordinary income) rather than a capital loss. Capital losses are limited to a $3,000 ($1,500 if married filing separately) per year deduction once any capital gains have been offset.

Passing the trader test

What does it take to successfully meet the test for trader status? The answer is twofold:

  1. The trading must be “substantial.” While there’s no bright line test, the courts have tended to view more than a thousand trades a year, spread over most of the available trading days, as substantial.
  2. The trading must be designed to try to catch the swings in the daily market movements. In other words, you must be attempting to profit from these short-term changes rather than from the long-term holding of investments. So the average duration for holding any one position needs to be very short, generally only a day or two.

If you satisfy these conditions, the chances are good that you’d ultimately be able to prove trader vs. investor status. Of course, even if you don’t satisfy one of the tests, you might still prevail, but the odds against you are higher. If you have questions, in Brea, 714.990.1040 or Visalia, 559.732.4135.




You're invited to attend Frazer, LLP's Webinar Series for Contractors. Each webinar is complimentary and will be held from 10:00-10:45 a.m. Pacific. Register by clicking the button below. Login instructions will be emailed in advance.

September 22, 2016
Boost Your Bottom Line With Benchmarking

To maintain a competitive edge, it’s critical you to know where you stand financially. One way to do so is by benchmarking. Attend this webinar to answer:

  • How is my business doing compared to my competitors?
  • Is my business recovering from the economic downturn?
  • How is the construction industry performing in southern California?

Presented by:  
Brian Tunnelle, CPA, CCIFP, CGMA, MBA,
Partner, Frazer, LLP

October 27, 2016
Enhance Your Wealth With Targeted Tax Strategies

Another tax year end is approaching. It’s time to turn your attention to tax strategies that could lessen your tax obligation and enhance your wealth. Attend this webinar for a review of tax strategies that could accomplish both goals.

Presented by:  
Lou Rendon, CPA, MBT
Partner, Frazer, LLP

November 17, 2016
Take Advantage of Tax Credits

Are you aware of research and development (R&D) incentive programs? Are you taking full advantage of the R&D Tax Credit? Attend this webinar and learn about the broad range of common construction industry practices that qualify for the credit and how to claim the credits you deserve.

Presented by:

Register Today!

Frazer LLP Top 200 Accounting Firm
Frazer, LLP Named a Top 200 Firm in the U.S.!

We are pleased to announce that Frazer, LLP has once again been named one of the Top 200 accounting firms by Inside Public Accounting, a leading accounting industry publication.

While we are proud of this achievement we are even prouder of the relationships our team has built with clients for nearly a century. Our firm size enables us to offer our clients industry-specific services and expertise, and to call upon team members to help solve clients' problems.

Thank you for the confidence you've placed in Frazer, LLP. We will continue to work hard to earn and deserve your trust.

Frazer, LLP: With You. For You.


Frazer LLP | 135 S. State College Blvd., Brea, CA
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