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Taxes – Forex Losses in an LLC that conducts other business?

Hi, I have an LLC that performs 2 primary activities:
1) Consulting/Software Development Work
2) Automated Forex (currency) trading

Lets say (for example) that I made $40,000 doing the Consulting work and LOST $20,000 doing the Forex Trading.

Can I fully write-off that $20,000 loss and only pay taxes on the $20,000 net? If so, what documentation do I need and where do I put it on my tax form?

Thanks!!

The tax code doesn’t let you mix these. Your business is clearly the software development work. You had income here and when you had contracts you actually worked on them.

Your losing hobby was the forex trading. Most likely these will fall under 1256 rules and be entered on schedule D and limited to $3000 of loss against other income.

This entry was posted on Monday, March 22nd, 2010 at 5:22 pm and is filed under automated forex trading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Taxes – Forex Losses in an LLC that conducts other business?”

  1. v b says:
    March 22, 2010 at 10:53 pm

    The tax code doesn’t let you mix these. Your business is clearly the software development work. You had income here and when you had contracts you actually worked on them.

    Your losing hobby was the forex trading. Most likely these will fall under 1256 rules and be entered on schedule D and limited to $3000 of loss against other income.
    References :

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