Even though this change occurred in 2018, we wanted to make sure to remind everyone of this disallowed deduction as it may not have applied to you but may in 2019.
Effective January 1, 2018, expenses subject to a 2% floor on the Form 1040 (Personal Tax Return) became disallowed. This means that investors re no longer able to take a deduction for investment related expenses.
On the contrary, active traders continue to enjoy deductions for investment and trading related expenses. In order to qualify as an active trader, there are certain guidelines that you must meet. This includes engaging in trading activity that is substantial, frequent, and continuous.
An active trader should have few or no sporadic lapses in his or her trading during the year, in other words, an active trader is one that engages in active trading for 80% or more of open trading days.
Please note that this rule also applies to funds.
If you need more information or clarification, please call Mike at 630-461-5841 or email Mike@cogcpa.com.