Follow-up Accounting package for "Day Traders"

snip

The passive income rules for an S corporation apply only to those that were formerly C corporations.

Drew Edmundson, CPA Cary, NC

well, you don't have to worry about a change in accounting methods (mark to market) because you are not a trader, you are acting as an investor--"day trading" requires consistent, short-term trading throughout the year. This does not sound like a business at all, and I doubt that the IRS would look favorably at your S-Corp if they chose to scrutinize it. However, others here have more experience with the creations of lawyers and hopefully they will chime in.

As Drew as so kindly pointed out, my observation may not apply to you. Thanks Drew - I knew I recalled something.

I would also caution the OP that it is necessary to get guidance from ALL the disciplines that will be impacted by forming an entity. All too often I've met with clients whose attorneys did something that was absolutely, without question legal and also very stupid and costly from an accounting and tax perspective.

Never get your tax advice just from an attorney when you're engaging in tax planning - Start with your accountant. Then when your attorney says he's finished, have your accountant review it FIRST before finalizing it (and yes, even when you're engaging in estate planning).

As for "Advising you accordingly" - keep in mind that you are in a free and open forum. You are free to ask pretty much whatever you like, but you'd be a fool to rely solely on anything you get from any of us here, me included, for several reasons.

First, I would never advise you post enough information here so that any of us pros could give you a concrete answer. I wouldn't want that much if MY info in cyberspace.

Second, even if you posted enough info, I doubt any of the pros here would do all the work necessary to give you binding guidance for free. Remember, for many of us this is our we make our livings and feed our families. The pros who answer posts here do so as a courtesy and to help get people on the right track, it should NEVER be construed as binding advice. And if it isn't binding, what good is it?

Third, and perhaps most important, you have no way of knowing whether any of the responses you get are coming from someone who is competent. I can SAY I have whatever credentials I want, but my saying it doesn't make it so. Before you rely on advice from anyone, me included, you need to exercise some due diligence and make sure we are who we say we are.

Good luck, Gene E. Utterback, EA, RFC, ABA