I think we may all agree that there are many distinct advantages to setting up and trading FOREX under an Limited Liability Company (LLC). From my understanding, business expenses (internet, home office, gas, etc.) may be deducted from the net capital gains come tax time.
However, I don't understand how exactly a mult-member LLC would be taxed. Supposedly, the IRS treats multi-member LLCs as a partnership for taxes; as the income is divided among the members, passed through the LLC, and reported on the individuals respective personal tax returns, with Schedule E attached.
My question resides in how capital gains taxes are structured in this system. I surmise that the LLC serves as a conduit for the money to travel through; having business expenses, insurance plans, retirement investments stripping down the total taxable amount. The "income" which is capital gains income would then be distributed and reported on Form 6781 (Section 1256 contract election, having opted out of IRC 988), transferred to Schedule D and filed with the LLC's tax return? Then, in accordance with the LLC operating agreement, the net income would then be adjusted to the members. Would the members just report this income on Schedule E? My understanding was that the income would not be taxed if trading under an entity, claiming and gaining trader tax status, and using mark-to-market accounting (no self-employment (SE) taxes).
Just for example question, ACME FOREX, L.L.C. makes $200k claiming all the req'd provisions for minimizing taxes above. What does the income flow chart look like, from income into LLC, business deductions from gains, to business taxes (partnership?), to the individual members and their tax returns?
Here are some links that I derived some of the above from:
http://www.greencompany.com/Educatio...Currency.shtml
"The Tax Guide for Traders" by Robert Green (a good book to start)
http://ragingbull.quote.com/bullseye/node/274
However, I don't understand how exactly a mult-member LLC would be taxed. Supposedly, the IRS treats multi-member LLCs as a partnership for taxes; as the income is divided among the members, passed through the LLC, and reported on the individuals respective personal tax returns, with Schedule E attached.
My question resides in how capital gains taxes are structured in this system. I surmise that the LLC serves as a conduit for the money to travel through; having business expenses, insurance plans, retirement investments stripping down the total taxable amount. The "income" which is capital gains income would then be distributed and reported on Form 6781 (Section 1256 contract election, having opted out of IRC 988), transferred to Schedule D and filed with the LLC's tax return? Then, in accordance with the LLC operating agreement, the net income would then be adjusted to the members. Would the members just report this income on Schedule E? My understanding was that the income would not be taxed if trading under an entity, claiming and gaining trader tax status, and using mark-to-market accounting (no self-employment (SE) taxes).
Just for example question, ACME FOREX, L.L.C. makes $200k claiming all the req'd provisions for minimizing taxes above. What does the income flow chart look like, from income into LLC, business deductions from gains, to business taxes (partnership?), to the individual members and their tax returns?
Here are some links that I derived some of the above from:
http://www.greencompany.com/Educatio...Currency.shtml
"The Tax Guide for Traders" by Robert Green (a good book to start)
http://ragingbull.quote.com/bullseye/node/274