Net breakdown (contracts traded):
ZS $613(12), GCL $1062(4)
ZS $613(12), GCL $1062(4)
| RESULTS FOR DAY | |
|---|---|
| Contracts: | 16 |
| Net $P/L: | 1676 |
| Wins: | 2 |
| Losses: | 1 |
| Win%: | 67 |
| Avg$Win: | 891 |
| Avg$Loss: | -106 |
Tax Evasion Strategy?
OK, my recent trading has got me thinking (always a dangerous thing). Here's the situation I hope to be in "some year..."
I currently have 2 trading accounts, a taxed one that I get a 1099 on from my broker each year, and a tax-free Roth IRA. Let's assume that I normally take the same trades in both accounts and I end up with ~$50k in profits at the end of November of "some year" in both accounts. Now I don’t mind paying taxes when I'm required to do so but if there's a legal way to avoid paying, or delaying payment, I'm all for it!
During the month of December, it should be possible to hedge one account against the other with equally opposite trades, drawing down the taxed account while increasing the capital in the Roth IRA. This could be via day trades or longer swing trades. Short 10 ES in 1 account, Long 10 ES in other - you get the idea. The question is what trading method can be incorporated to do this successfully? The risk of course is that if you are wrong, you will draw down the Roth IRA thereby increasing the now taxable gains in the taxed account and by the end of December you will owe more than you would have originally. Any ideas out there blog readers?
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My advice... drink heavily until the alcohol kills those brain cells that gave you this little idea, then get back to the very good run your on right now.
ReplyDeleteYour doing great right now, don't start screwing with the IRS.
:-)
LOL Michael - that's funny! I'll start drinking. But seriously, there has to be a low-risk way to do this! :)
ReplyDeleteI don't know man, maybe...
ReplyDelete;-)
That's an interesting idea, except you have no idea which leg will profit and which leg will lose.
ReplyDeleteMaybe you can take your existing strategy into the IRA account and use an options account to trade a delta-neutral portfolio in the taxed account. If you win more often than you lose, and the hedges tend to be a net loss, then maybe the hedges can then become tax deductible. That way, your cost of hedging can be offset through the tax benefit. The problem is that the tax benefit is limited.
If they don't tax dividends very high, perhaps there's a way to create an agribusiness that pays you the proceeds of the hedging operation as a form of dividend. I'm not sure how that stuff works, but I'm sure there's good, legal tax strategies that work.
TC, thanks for ideas. Yeah that's the bottom line - not knowing which leg will win. Perhaps averaging down in the taxed account (if that leg is losing) and averaging up in the IRA would buy some time and allow an exit later when price reverts to mean. The risk increases if reversion doesn't happen though. :(
ReplyDelete