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Esparza Bofill, learned the hard way that “out of sight, out of mind” is not a phrase that describes our tax enforcement agency. Common sense may have told the 25-year-old Spanish immigrant that no income means zero income tax. For seasoned traders, however, Mr. Bofill’s problems are a staunch reminder that “common sense” should never be used in conjunction with the phrase “trader taxation”.

After migrating to the US, Mr. Bofill struggled on a modest income and turned to trading as a means to pursue the American dream. After losing all trading capital, he decided to move back to Spain. Unfortunately, the saga did not end there… a few years later, he was hit with a staggering $172,101,056.48 tax bill. This particular “tax bill” surprise is not uncommon. Without proper traders accounting and schedule D reconciliation, this could happen to anyone.

How could you owe Uncle Sam when you lost money? The answer comes directly from the 1099 generated by your broker. The “gross proceeds” from the investment activity is reported to the IRS without the offsetting of the “cost basis”. The 1099 is basically tabulated as if you bought your investments at no cost and turned around and sold them for 100% profit. Avoiding this common reporting issue will save you time, energy, and possibly a severe anxiety attack.

A Simple Solution for Avoiding a Possible Million Dollar Tax Problem

With a large government deficit, stay clear of the IRS cross hairs. Now more than ever, it’s extremely important to get proper tax help, and although most CPAs won’t admit it, they are not always experienced in trader taxation. Avoid any miscommunication with the IRS by allowing our trader tax professionals to reconcile your trade data and generate an accurate Schedule D report.

Register now for our Schedule D service and receive $50 off! Click here to visit our schedule D section and use coupon code “bofill” to receive your discount. (Act now as this offer expires soon without further notice.)

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