2011 Tax Changes

Well it seems that we might know of all of the tax changes that will affect you for 2010 & 2011 now so let's start discussing them.  It will probably take a couple of days so that you are not bored out of your gourd, but here goes.

Final Regulations on Stock Reporting Rules

The good old IRS has issued the final regulations explaining the reporting requirements that will be put into effect for most securities you acquire after 2010, for mutual funds ar for a drip plan.  Brokers will have to report to the IRS your adjusted basis in the security and if it has been sold whether the gain is long-term or short-term capital gain.  For those of you who are wondering what the difference is it is ST Capital Gain if you hold a position for less than 365 days before selling it, and long term if you hold it for more than 365 days.  As you can see this is going to tighten up the IRS position on whether you are properly reporting your gains/losses and also will probably work into a look at wash sales.

More Guidance on the Small Business Health Care Credit:

Now if you are trading as a business this could have a large impact on you.  For tax years beginning after Dec. 31st 3009, an eligible small employer (ESE) can claim a tax credit for non-elective contributions to purchase health insurance for its employees. An ESE is an employer with no more than 25 full time employees employed during the tax year and where the employees have wages that average under $50K per year.  The full credit is available to you if you have 10 or fewer FTEs with an average wage of less than $25K.

These two will directly affect you if you are an active trader, especially if you have taken my advise to trade as a business.  Hope all is well...regards Jim