In this episode, I introduce the US income tax provisions that apply to personal investors and traders.  I’ve got 10 years of experience compiling and filing my own tax returns on these activities, so I’ve got the real-world know-how to help you make sense of this complex topic.  Over the years, I’ve dealt hands-on with such topics as: wash sales, PTPs, K-1s, options exercise and assignment, qualified dividends, Section 1256 contracts, and more.  This is the first part of a multi-part series.

Important disclaimer: I recommend you consult a tax attorney or CPA for advice on your personal tax situation.  I am neither a tax attorney nor a CPA.  Furthermore, I can’t possibly know all the details of any listener’s unique financial and tax situation.  Therefore, I’m not in a position to provide personalized recommendations and this podcast is not to be construed as such.


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(CC image by Chris Potter on Flickr)

Section 1: Why Is This So Important?

  • You’re responsible for your tax return, even if you hire someone to do it
  • Brokers and tax preparers make mistakes; check their work
  • The benefits you get when you understand the tax consequences of your trades

Section 2: Basic Principles

  • Type of account
    • Taxable accounts: the main focus of this series
    • Tax-preferred retirement accounts
  • What is income?  Four types
  • Amount vs. timing

Section 3: How Will I Be Taxed on My Investment Activities?

  • Mutual funds
  • Most individual stocks and ETFs
  • Section 1256 contracts (e.g. futures)
  • Precious metals ETFs (e.g. SLV, GLD)
  • Publicly traded partnerships (PTPs)
  • Master limited partnerships (MLPs) and royalty trusts
  • REITs
  • Am I a professional trader?


IRS Topic 429: Traders in Securities

Intro music and mid-program music by

Attribution link for the image of 1040 forms at the top of this post:


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