Business Trader Status Qualification Test

1. In the year you are trying to initially qualify as a business trader for tax purposes, how many round trip trades did you make last year or intend to make during the year?
0 - 200201 - 375376 - 500501+

2. What percentage of trading days did you place trades during the year?
20%40%60%80%+

3. What is your typical holding period on a trade?
Less than a day1 - 5 daysLess than a month1 - 6 monthsMore than 6 months

4. How many hours per day do you consistently spend involved in your trading business?
6+ hours3 - 5 hours1 - 3 hourssporadic

5. How many days per week do you consistently spend involved in your trading business?
5+4321

6. Did you trade all year (or do you intend to trade all year) without any intermittent trading periods?
YesNo

7. Did you (do you) keep a trading journal or diary and log the time you spent (spend) in your trading business each day?
YesNo

8. Is your trading activity considered substantial -- meaning your gross proceeds at the end of the year are in the millions of dollars (sum each trade's sale price per share times the number of shares traded).
By way of example, if you trade $100K 2-3 times per day that's $300K per day times 200+ trading days which equals $60 million+. Or if you trade $10K per day for 200+ trading days per year, that would equal $2 million+.
YesNo

9. What is the dollar amount in your trading account(s)?
$100,000+$50,000 - $99,999$25,001 - $49,999$5,000 - $25,000Less than $5,000

10. Do you have the full intent of running a bona-fide business and making a living from your trading activities?
YesNo

11. Have you set up a separate legal trading entity such as a limited liability company or S corporation?
YesNo

12. Do you have significant trading expenses such as computer equipment, fast Internet service, data fees, home office and education?
YesNo

13. Have you attended formal training sessions with a successful trader or reputable firm?
YesNo

14. Do you make your own decisions or do you rely on someone else?
YesNo

15. Do you do your trading through a taxable account or a retirement account?
Taxable AccountRetirement Account





Disclaimer

Pro Trader Tax, LLC provides the Business Trader Status Qualification Test for educational and informational purposes only. Information delivered by, or accessed through www.protradertax.com does not constitute specific tax advice. The tax laws and IRS rules are constantly changing and shifting, and each taxpayer's situation is different. This Business Trader Status Qualification Test is not intended to be a 100%, full-proof determination as to whether a taxpayer will qualify as a business trader in the eyes of the IRS. However, we hope that it provides some insight into the requirements to achieve tax trader status and the areas to be concerned about with your own personal situation. You are solely responsible for your tax reporting decisions, and you should carefully evaluate all information delivered to you by Pro Trader Tax, LLC or any other resource. Not all information may be appropriate for all traders. Please consult your tax adviser or call us at Pro Trader Tax, LLC to discuss your specific situation.