While I know there are a few other threads that discuss a related topic of using corporate entity for the purpose of deducting capital losses greater than $3,000, I'm curious what others think of this concept:
Since I invest in the stock market with a swing-trading strategy that produces short-term gains, I’ve been considering possible tax advantages of establishing an S-Corporation/LLC to channel my investing through, in consideration of more favorable tax rates (long-term).
My concept is as follows: Incorporate and open a brokerage account in the corporation’s name. I would then act as a lender to the corporation for capital. I would have the loan setup to have annual/rolling payments due 1 year and 1 day from the date of investment (and report payments back on form 1099-OID). My corporation would be charged a significant interest rate that is commensurate with the returns my stock investing is generating - it would be a variable interest rate..
To make sure I’m being paid a proper salary through the S-Corp (per IRS requirements) I would pay myself the first $17,500 (401k contribution limit), and the company would provide a matching contribution of the remaining $33,500 - to the reach defined maximum contribution limit.
Would this work per IRS rules?
If not through the concept I’ve illustrated above, is there any other acceptable alternative (as deemed by the IRS) that would allow the same tax benefits?
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