Originally posted by
@Ashish Acharya:
@John Newburg , this is lengthier discussion compared to a simple question you asked.
It depends on if IRS considers you an investor or trader.
they look at different factors, I pulled court cases where they looked at these:
(1) the taxpayer's investment intent;
(2) the nature of the income to be derived from the activity; and
(3) the frequency, extent, and regularity of the taxpayer's securities transactions (Kay; Mayer; and Moller)
A taxpayer is a securities trader only when both of the following are true:
(1) the taxpayer's trading activity is substantial; and
(2) the taxpayer seeks to profit from short-term swings in the daily market movement, rather than to profit from the long-term holding of investments.
Thus, it is important to look at such factors as the number of trades, the average holding period, the sources of income, the taxpayer's ongoing involvement in the activity, and the percentage of available trading days on which trading activity occurred (Holsinger).
If you are a trader, you have the option to take home office deduction as an ordinary business expense. You have to meet rules for home office deduction.
