Originally posted by: jjsole
Originally posted by: nocash
I don't know first hand about any of that. Other then what i've read on zecco's forums. The complaint was a couple months old, and haven't heard any more about it. you are required to submit SS# on application via fax before trading. On the application is a substitute W-9 Im guessing the guy complaining checked backup withholdings on his application. Been wondering myself how tax withholdings would work on stock sales. Since not all sales are profit. Really don't know how it all works as I haven't traded anything yet. Just trying to wade through the information i can get. My ACH transfer is outa my bank now and not yet showing in my zecco balance. And shows my paperwork as being complete. Should be able to trade by Monday I'm thinking I will do a small test trade then, before I jump in. Shame I missed out on this nice stock market rally this week, but glad i missed the big drop still some bargains to pick up
Unless things have changed in the last year or two, when you sell stock for a profit, you have to pay capital gains, even if you had a previous position in the stock that you sold for a loss, or had positions in other stocks that you sold for losses as well. In other words, the Irs doesn't allow you to offset the losses. However you're able to write off 3k in losses per year, and can carry over additional losses to future years 3k per year until its all written off.
If you're trading for a 'livelihood' tho, ie as a business or is a fair portion of your annual income (the definition of 'livelihood' is a little vague), you can avoid capital gains altogether and simply offset all profits with losses. Technically someone needs to notify the Irs before they do that tho to let them know that they are electing to treat trading as "mark to market" under Irs section 475(f)(1). More than you probably need to know at this point, but that's the gist.
(for more info read 'special rules for securities traders', 2006 irs pub 550, pg. 72)