Friday, May 7, 2010

RE: [TheOptionClub.com] To Mr. Sheldon.

 


I don't know if I'd say I have it together but I'm constantly working on it trying to get there.  No at this point I couldn't live off of my income and I'm not where I expected to be but I am progressing & I do supplement our income nicely.  When I first started I was putting in probably 60 hours or more a week.  Now it kind of depends, I would estimate on average about 10 hours on stocks & 10-15 hours on futures when I'm playing futures.  As far as the market goes I do primarily covered call plays although I do watch what is going on in the market & try & take advantage of breaking news issues such as the mine collapse in West Virginia (MEE) a few weeks ago, I made a little over $2,500 (156%) in just a few days on that tragedy.  The oil rig explosion that happened recently (RIG) we made almost $4,000 (363%)in a week, and most recently when the 2 minors were killed in a collapse on 4/29 (ARLP), we managed to get out yesterday during the market collapse & made $1,000 (79%)for the weeks play.  Don't take those as normal, they were three incidents that were unusual that I just happen to catch at the right time.  I also try & watch for potential mergers & have had some success with those.  Our first year in the business we were fairly successful trading the futures market in a black box program, specifically the mini-S&P & the mini russell.  In about 5 months we made around $40,000 but when things started to turn we got out, still up around $30K plus.  About a year ago we bought a high dollar program to trade the futures market ourselves.  We have had limited success with that but have had some personal health issues that have caused large time breaks from the program.  I firmly believe that it is possible to easily make at least $250 a day & potentially $1,000 a day in a matter of just a few hours and do it pretty consistently.  Due to some recent health issues & a recent move I haven't traded futures for several months but am trying to get back into that market.  I love what I do as I can work when I want, dressed how I want and never have to leave home.  I have a full blown office with fax, copier, & scanner and twin monitors on my computer.  I plan on going to 4 monitors sometime in the future but am not ready to just yet.
 
If I can tell you anything else feel free to contact me direct.
 
John

 

To: OptionClub@yahoogroups.com
From: Praesto12@yahoo.com
Date: Thu, 6 May 2010 19:55:14 -0700
Subject: Re: [TheOptionClub.com] To Mr. Sheldon.

 
John, It sounds like you have it together. Are you able to achieve your financial goals through just trading full time? What does full time mean exactly?
Are you putting in 40 or more hours in a week? I'm curious to know what it's like to be trading for a business? Are you enjoying doing the trading?
 
 
 

 

From: john sheldon <johnlsheldon@msn.com>
To: optionclub@yahoogroups.com
Sent: Thu, May 6, 2010 1:20:42 PM
Subject: RE: [TheOptionClub.com] LLC?

 

 
Ross,
 
Yes, I do trade full time.  My partner/50% shareholder in the corp does work a full time job.  One of the reasons we formed a corp was at the time we began I was on disability and unable to make any money over $600 without losing my disability.  I have been drawing a very small salary & getting all the benefits as stated in our resolutions, ie reimbursement of all medical insurance premiums, all medical expense, continuing education, etc.  Now that I'm off disability & on regular social security I will be drawing a bigger salary.  Originally I was not a member of the LLC, it was my partner & the corporation, as all income flows through the LLC.  Now that I can make an unlimited amount of money we are revising the LLC to include me as an equal member.
 
John 


 

To: OptionClub@yahoogro ups.com
From: rvdidit@yahoo. com
Date: Wed, 5 May 2010 21:01:10 -0700
Subject: RE: [TheOptionClub. com] LLC?

 
John,

As you are set up as an entity managed by a corp., are you also identified then as a "full time trader"? Or is it a business man with income from trading perhaps?

Just curious because we may incorporate later this year.

Thx,

Ross

PS, here in NM, they have a gross reciepts tax paid by everyone on almost anything that is sold within the state.
I wonder how we would handle that if we incorporated.
My wife actually does not pay it because all her clients are out of NM, and first use of services are out of state.

Ross


--- On Wed, 5/5/10, john sheldon <johnlsheldon@ msn.com> wrote:

From: john sheldon <johnlsheldon@ msn.com>
Subject: RE: [TheOptionClub. com] LLC?
To: optionclub@yahoogro ups.com
Date: Wednesday, May 5, 2010, 8:19 PM




I started to answer this but realized that I'm wasting valuable time on a subject that is better researched by interested individuals through REAL EXPERTS that know what they are talking about.  My only point in the very beginning and now is to try & get people to understand that not everyone needs or should set up an entity, but they do need to research the subject for themselves with people they consider COMPETENT & then make their own decision based on their circumstances.  I can put this time to much better use in the stock market & the real estate market.
 
One point though, just for the sake of showing your knowledge, I live in the state of Nevada & have for 26 years.  Nevada has NO state income tax & NO corporate tax.  That is one of the major reasons that many, many well known, major corporations move to Nevada every year.
 




 
To: OptionClub@yahoogro ups.com
From: jack@jackcpa. com
Date: Wed, 5 May 2010 17:34:34 -0500
Subject: RE: [TheOptionClub. com] LLC?

 

Whoa, back the truck up.

 

A corporation is NOT going to protect your assets if you are sued personally.  Your stock in the corporation is subject to being seized by the creditors just like any stock you owned in GM or IBM.  They will not need to 'pierce' the corporate veil when they own the corporation. L

 

Corporations pay state income taxes just like individuals.  Their tax is often prorated based on the assets or payroll or sales in each state.  If you live, vote, own r/e in a state, I suspect the state will argue that any trading you do is subject to state income tax.

 

DE and NV have lax rules about different types of stock.  And about voting, etc.  There is a big difference between the handling/taxation of big corps vs. one man shows.  If you are sued in your home state (or the home state of your attacker), that state's laws are going to determine whether the corp is pierced.

 

Great, put him on the corp payroll – and pay $700 a year in SS taxes?  If you paid him as an individual, there would be no SS taxes. J

 

Yeah, right.  What makes you think the lawyer has any assets?  His are probably all in his wife's name. J

 

Actually, I understand the best liability protection is from a limited partnership – they cannot take your LP interest, all they can do is get a charging order – which makes them liable for your taxes. J

 

I know, there are a lot of war stories out there where a corp "might' have protected the individual.  What I want to hear are the stories where a corp DID protect the individual. J 

 

I am not a lawyer either.  To be such an easy going guy, I just realized I sure do know a lot of lawyers. L  I used to be a CPA.  I have set up a lot of corp's and LP's.  Fortunately, I never had a client need that liability protection. J

 

From: OptionClub@yahoogro ups.com [mailto:OptionClub@ yahoogroups. com] On Behalf Of john sheldon
Sent: Wednesday, May 05, 2010 9:27 AM
To: optionclub@yahoogro ups.com
Subject: RE: [TheOptionClub. com] LLC?

 

 



It's not about liability protection, it's about asset protection when it comes to trading. If your trading as an individual and gfety sued over an auto accident or some other type of incident, you could lose your trading account in a heart beat.  How much insurance will protect you personally?  Pick a number.  As a licensed insurance investigator for the past 30 years I've seen more than my share of people who lost everything they had because they didn't have sense enough to talk to someone who knew how to protect their assets, ie, an attorney who specializes in asset protection or a KNOWLEDGEABLE insurance agent.  And as with all things, all attorneys & insurance agents are not created equal. 
 
Second, your right, at a personal level you probably would be sued in you state of residence for a personal liability situation, however if your corporation comes into play in any way, shape, or form, the laws of the state of incorporation are the laws that apply as far as getting to the assets of your corporation.  And in NV as I believe is the case in DE, it's almost impossible to get at corporate assets unless the corporation itself is liable for what ever action your being sued for and then the only protection will be insurance, which is still highly recommended.
 
Third, how does someone tell what state a person is trading in, if your corp is registered in NV, or DE, or whatever state, & you have a resident agent, & an address and phone number in said state where are you doing business??  Right now I am in the state of WV on extended vacation, I am of course still trading everyday, am I doing business here?  If what you think were true then I can't imagine why there are so many MAJOR corporations that file their corporations within the states of NV & DE.  No one is suggesting you won't have to pay state taxes on YOUR income, (your net trading income from your LLC goes onto your personal return) but among the benefits of a corp are that you can move a lot of your income to the corp & the state of NV has no corp income tax nor any personal income tax for that matter.
 
Fourth, I wasn't suggesting writing off a car, unless of course your into real estate investing, in which case a car can be easily written of as a business expense, the same way I do in my investigation business that is managed by my Corp.  What I had tried to illustrate was that IF you were going to buy your kid a car anyway, why not put the kid on your payroll, so you could write off the car payment as salary.  If the dollar amount stays under a certain amount (it was $4500 when I incorporated) , your kid does not have to pay tax on the income, you've been able to write his pay off the business therefore saving the personal tax you would have paid on that money.

And on the plus side, another great reason for using an experienced attorney for these type of things is that if they give you some bad advise or put you into legal jeopardy you can always sue them for malpractice.
 
And finally let me say, first, I am not an attorney so nothing I have written here or in past posts should be construed as legal advise.  The point of all of this has been that as in all cases, one size does not fit all but how do you make an educated decision without looking at all the facts & possibilities?  Legal issues and asset protection are not things to get advise from Aunt Mary, your barber/beautician, next door neighbor or any other non-professional.  Do your own research, talk to professionals who specialize in investors, maybe talk to more than one, but get the necessary information to make an EDUCATED decision as to what is best for you and your situation.  As with insurance, the time to find out if your insurance is any good and covers what you need covered IS NOT when you have a claim.
 
In closing, let me say I did not post to this thread to start any big controversy, I was only trying to point out because some people have formed corps or LLC's & it didn't work out for them, or someone got some information that indicated it wasn't worthwhile to trade as an entity, should not take that as gospel.  And the same goes for having talked to someone who has benefited from trading as an entity, IT ISN'T FOR EVERYONE.  As I said above, anyone looking at the subject of liability and/or asset protection should do their own research & make their own decision based on their circumstances and FACTUAL INFORMATION.  Trading has virtually no liability exposure but if you build a large account you have a large asset exposure.  Real estate investing on the other hand as well as most other business have large liability exposures as well as asset exposure.  Insurance can only go so far to protect you, you need to be sure your protected in other ways as well.
 
John Sheldon
 
To: OptionClub@yahoogro ups.com
From: jack@jackcpa. com
Date: Wed, 5 May 2010 07:15:54 -0500
Subject: RE: [TheOptionClub. com] LLC?

 

First, how much liability protection do you need for a 'trading vehicle'?

 

Second, you will likely be sued in your state of residence.  If you do not live in NV, I doubt the NV laws will have much protection. L

 

Third, if you are doing business in another state, you are 'supposed' to register as a foreign corporation – and pay taxes in said state.  (Probably can get away with that since you are not advertising, don't have an office, etc.)

 

Fourth, a lot of the 'tax benefits' of incorporating, (write off a car – especially a kid's car, hiring your kids, etc.) are getting on the dark side of the gray area.  If audited, you will likely lose that 'benefit'.  On the plus side?  I don't think it would be considered fraud so you are unlikely to go to jail.

 

From: OptionClub@yahoogro ups.com [mailto:OptionClub@ yahoogroups. com] On Behalf Of john sheldon
Sent: Monday, May 03, 2010 10:57 PM
To: optionclub@yahoogro ups.com
Subject: RE: [TheOptionClub. com] LLC?

 

 



The protection is on a state by state basis, you are still protected in Nevada (which is a reason to inc in Nevada) as well as one or two other states. 
 
John S


 

To: OptionClub@yahoogro ups.com
From: rvdidit@yahoo. com
Date: Mon, 3 May 2010 20:37:39 -0700
Subject: Re: [TheOptionClub. com] LLC?

 

I heard somewhere that asset protection really depends on what insurance you have.
You arent really protected any more being a corp because they can get the corp. so you need the insurance anyway. Again, it probably depends on individual case.

Ross

>
>
>
> _____
>
> From: john sheldon <johnlsheldon@ ...>
> To: optionclub@yahoogro ups.com
> Sent: Sat, May 1, 2010 8:35:35 PM
> Subject: RE: [TheOptionClub. com] LLC?
>
>
>
>
> I trade under an LLC & have a corp that manages the LLC to obtain more tax benefits.
>
> John S
>

 

 







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