$10,000

I'm not sure from where you are as you didn't mentioned in your original post but I would give you an idea of what would happen here in India.

1. The first thing you did is you made 10K USD from IM which will be considered as your income and here we have to pay income tax and declare the income to Income Tax department. So you have to pretty much pay tax on the income you made. This tax will be come under income from business head.
2. Now your second question about selling your stock. You don't need to pay tax till then you made profits. Once you cash out and sell off your stock you have to again declare your income in current fiscal year and you have to declare the profits. This tax will come under income from other head.

If you don't have an LLC formed and I assume not reporting IM income, wouldn't investing a sum of 10k into stocks eventually lead and raise red flags and lead back to trouble? 8k banking deposits are immediately reported from your bank I suggest forming a LLC they protect you in the long run and save you taxes that you'll eventfully have to pony up. In my opinion 10K is starter money if it's for long term stock market ventures, unless you intend to gamble it up! If so there are much better odds around or better investments....., why not donate that's always tax deductible?

Best bet is to talk to an cpa/accountant.

agag2 said:

Hello

If I make $10,000 in profit via IM & then invest it in the stock market & loose the money (theoretically speaking) do I still have to pay taxes on those $10,000 or is it like any business loss that I'm allowed to write off?

Secondly, assuming in the first case I do not have to pay taxes, what if I keep the money in the stock market without cashing out (w/o selling the stock) do I pay taxes only after I sell the stock? Or do I need to withhold money for taxes?

Thanks

Click to expand...

To answer In short and simple, NO.......
You can't adjust loss from stock market with income from Business or Professional Income.
Moreover It also depends on country specific tax laws But I am talking about Indian laws and other nations also have more or less similar tax laws unless it's a tax heaven.


Under Indian Tax Laws, Income from stock investment is categorized under Income from speculative activity and taxation depends on duration of your investment, In case stock is sold after 1 year from date of purchase than it is classified as Long term capital gain from speculative sources and is totally exempted from tax provided it's a online transaction and routed through recognized stock exchange and in case shares are sold before one year of purchase then it will be taxed@15% irrespective of tax slabs. Further only allowable setoff against such income is profit from other speculative investment of similar nature.

Source:- Experience of past 8 years as a equity trader.

Any related concern or doubt feel free to contact me over skype or PM me......

It depends of the specific of your country and what is your current status (personal or corporated)

Here in my country i would meet 2 different outcome. (france)

I have 2 corporations. On the first i would pay taxes as i'm charged on my turnover while the other one is charged on the benefits if any.

However, the one i'm charged on benefits only, i have others fixed and social taxes . So one way or another you'd pay something if you intend to corporate yourself.

If you aren't corporated (still in france), you would have to pay taxes on the $10k as it would be seen as income. You may have taxes discount because you invest and if you invest in some projects that the Governement wants you to invest in.

I hope it would be of a help for you even though it is country specific.