Hey there! I'm Shanif - a young professional with a background in technology and a passion for investing and trading. I've been developing software since 1997 and have been trading options profitably since 2008.
I have a BS in Computer Science and Systems & Information Engineering, and recently earned my MBA, focusing on Quantitative Finance and Entrepreneurship. These days, I focus on generating high returns with options trading and building up a successful mobile software business.
People, Places, Things - My Best Shots
Taxes For Active Traders
Buckle down, and don’t worry
After a year of profitable research, analysis, buying, and selling, you may be feeling pretty good about yourself. You may have turned a few hundred trades into an annual income that you use to sustain yourself – or you may have merely made a few tweaks to long-term positions that you hope to rely on in retirement. But now it’s time to pay the piper.
Chances are, as an active trader you probably didn’t instruct your brokerage to withhold any of your profits for taxes, which means you’ll have to pay it all off by April 15. On top of that, you’ll have to jump through a million hoops just to file any paperwork that tells you how much you owe. This is not a fun time to be a trader.
But don’t worry, once you know what the IRS actually wants from you, it’s all fairly straightforward, and with a little bit of research and due diligence (traits you should have in abundance if you’ve been trading for a while), you’ll have your taxes done in no time.
To get started, all you’ll need is good tax preparation software. I’ve been using TurboTax for the past few years, but you may have your own preferences. Regardless of which package you use, you’ll likely need to upgrade to a version that will allow you to handle the sale of capital assets (said differently, you’ll need something that lets you record your investments). With TurboTax, this was the Premium version.
After you fire up the software and enter in the basics, you’ll need to report the boatloads of money that you made last year. When you get to the investments section of your return, your software package should provide you the option of filling out summary information and supplementing it with an attachment that lists out your trades. Here are a few important things to keep in mind.
Your broker will provide you with a summary of your basic gains and losses on the 1099-B. It will show the long and short-term losses that you incurred over the year, and will give you a breakdown of what your broker did and did not report to the IRS. Unfortunately, many brokers won’t be able to properly match all of the opening and closing trades you did throughout the year, particularly if you traded a lot of options, which means that many times the 1099-B will only give the gains/losses for a small subset of your trades, and will list every other trade you made throughout the year as a line item.
Reporting your trades
The IRS wants a record of every trade you made that’s not included in the summary on your 1099-B. They provide Form 8949 on which you can list the details of each of your trades, but if your broker is any good, you’ll have received a list of all of your trades that you can submit in lieu of writing out all of your trades on Form 8949 (as long as it’s in a similar format as the form).
Even though you can submit the statement provided by your broker, you’ll still need to record the total gain and loss from each of your short-term and long-term trades on the first line of Form 8949, which you’ll need to download, print, and mail in to the IRS after they accept your return. If you had multiple brokers throughout the year, you’ll need to list the gains and losses on a separate line for each one. In addition, you’ll need to attach Form 8453, which your tax software should provide for you.
If you switched brokers at any point during the year, like I did, you’ll have an even bigger mess on your hands. If you had any open positions when you switched to your new broker, you’ll need to reconcile the proceeds from any sales you made with your new broker with the cost basis incurred from the old broker. You’ll probably have to do this by hand, and report it on Form 8949 as needed.
Even if you’re an active trader, you may have several long-term investments which won’t need to be reported on Form 8949, or may be reported on Form 1099-B, which your broker provides you. Examine your investments and trades to see if any of them qualify.
Those are the most important things to keep in mind when preparing your taxes. I should note that I’m not a certified tax accountant, but I did do a lot of reading through the IRS’s instruction manual for how to deal with capital gains and actively traded securities. I’d recommend you do the same, you can find the guide here: http://www.irs.gov/pub/irs-pdf/i1040sd.pdf.
This article was just a quick introduction to taxes for traders. There are a lot of details and other issues that I haven’t mentioned here, so if you have any questions about your particular situation, don’t hesitate to read through the IRS’s guides, or even call their help line.
Good luck, and hopefully you don’t have to give away too much of your hard-earned profits!
View comments →
Today marks a big accomplishment for me – I’ve just gotten through the full P90X routine.
For those of you that are unfamiliar with this, it’s basically a super-intense 90 day workout regimen that includes resistance training, cardio, yoga, martial arts, core, and flexibility training. In fact, I’d argue that this is the most intense workout routine I’ve done in my 10 years of fitness training, so to be able to say I got through it is nothing minor.
I’ve definitely become more flexible, and I can do a lot of the exercises now that I couldn’t before. Unfortunately, I didn’t take any pictures or measurements, though, since when I first started I fully expected to re-start within a few weeks since one of my friends said that she’d go through the program with me. That never happened.
I plan on doing P90X 2 in a few weeks, and when I do, I’m going to do it right – full measurements, calorie tracking, pictures, and workout logs for the whole program. It has always been my goal to get close to 8% body fat. I wasn’t able to do it this time around (I can tell even without measurements). I think it was because I didn’t eat 100% correctly. So for the next round, I’m going to clean up the diet even more and make sure I’m doing everything completely correctly so that I can hit that goal once and for all.
When I start I’ll be posting my measurements and photos to keep me accountable and keep my motivation up.
But until then, I’m just going to enjoy the fact that I got through this crazy thing.View comments →
On March 8, I, along with 55 fellow Sternies, boarded a plane that was bound for the cradle of humanity – sub-Saharan Africa. I had never been to this part of the world before, so I was looking forward to a great trip with some of my closest friends from school. I wouldn’t be disappointed.
Our flight to Tanzania was in two legs – one from New York to Amsterdam, and the other from Amsterdam to Kilimanjaro airport. All in all, we spent about 15-16 hours on the plane. When we landed in Kilimanjaro, it was already dark. The airport and its surroundings were very characteristically third world – a small road out front, a single terminal, and a plethora of locals holding up handwritten signs waiting to take passengers to one of many beat up old vans and taxis parked out front in the dusty spots in front of the airport. In fact, the airport at Kilimanjaro reminded me a lot of the airports that I had seen in India and Pakistan. Interestingly enough, that comparison between South Asia and Africa would reappear throughout my trip.
Once we got through the airport, found our guides, and boarded up the vehicles that would serve as our safari jeeps, intercity transports, and city busses for the rest of the trip, we drove over to a local hostel, ready to rest for the night before a long morning the following day.
After getting some sleep, we woke up around 7 AM the next morning to begin the two hour drive to the foot of Mt. Kilimanjaro. Our itinerary for the day? Climb to Mandara Hut, 4 hours up the mountain.
We loaded up our jeeps (little did we know that the car we chose that day would determine what sub-group of Sternies we would spend most of the trip with, fortunately for me I got in a car with a bunch of my MBA 2 guy friends – our van would come to be known as the “bromobile”). Along the way, we saw views of the Tanzanian countryside and the people that lived there. The road was lined with straw and wooden huts occupied by impoverished Tanzanians. It wasn’t uncommon to see a young boy or old man walking slowly alongside the road, seemingly with no destination in mind. The one thing that hit us immediately was how dusty the entire country was. For that drive, and the rest of the trip, we’d all be fighting to avoid ingesting pounds of dust into our lungs.
When we arrived at the registration point, we all unloaded our hiking packs, gave our overnight packs to a group of porters to carry up the mountain for us, and began the hike up. It was long, and extremely, extremely tiring. But I’ll tell you, when we finally made it to the huts, I felt awesome. By the end of that hike, we were all dead, but we did manage to get settled, have a decent dinner, and play a surprisingly fun game of Uno until late at night.
After getting a great workout climbing (a part of) Kilimanjaro, our next destination, and the part of the trip that I was most looking forward to, was a series of safaris. Before our first day of safari, we transfered to Haven Nature campsite, where we spent the night before our first “game drive,” as our guides referred to them. The campsite, though far from luxury, was surprisingly accommodating. There were outlets to charge our electronics, raised beds inside high quality camping tents, and even hot showers and running water. Many of us even preferred the campsite to our bed and breakfast from the following night. In any case, it suited us well. We got another decent dinner, watched a small show that the locals put on for us, and hung out for a bit before heading to sleep.
Our first day of safari was in Ngorongoro Crater. This crater, which was a national park, was an enormous, semi-isolated, and extremely fertile area that had different animals as far as we could see. The drive in took several hours, but along the way we saw a troop of elephants making their way down to the crater floor, amazing views of the crater itself, and several other animals literally “crossing the road.”
Inside the crater, we saw nearly every animal you’d want to see on a safari – lions, elephants, rhino, hippos, zebras, wildebeest, monkeys, oxen, warthogs, hyenas, and more. On our way out, we even saw an elephant with a… let’s say, “5th leg.” I’ll let the pictures do the talking here.
After our safari, and a quick lunch, in the crater, we set off for our hours-long drive to the Serengeti. Along the way, we drove through vast, wide open areas covered by wildebeest. Unfortunately, no picture can do justice to what we saw, but try to picture an ocean of land, stretching out to the horizon, and as far as you can see, there are wildebeest and impalas dotting the landscape. It was truly an unbelievable site. Before reaching the campsite, the bromobile had the incredible fortune of seeing two awesome things.
The first was a beautiful sunset overlooking the savannah. Check out the picture below.
The second thing we saw was even more incredible.
As our jeep was driving towards our campsite, our driver (Salim – awesome guy) suddenly slammed on the brakes. When we looked to see why, we saw a leopard that had a baby “dik dik” (think of it as a super miniature impala) in its mouth, running across the road. When it saw us, though, it got scared, dropped the dik dik, and ran into the brush.
We sat there looking at it for several minutes, amazed. After several minutes of us looking at it, and it looking at us, it slowly got the courage to go back for its dinner. It crept towards our jeep carefully, and then in a swift leap, it went back to the dik dik, scooped it up in its mouth, and ran away into the other brush on the other side of the road.
We were all psyched to have seen that, and when we told the rest of the group what we saw once we got to the campsite, there was sufficient jealousy.
The campsite, itself, was a big step down from the Haven Nature camp the night before, though. This was true camping – makeshift tents with sleeping bags and a large cement floor with a wooden roof for our dining hall. It was a fun experience – for one night.
The next morning, we left the campsite and began our safari in the Serengeti. For me, this was the day that defined the trip. With an early morning departure, we began a slow drive through the brush, slowly getting deeper and deeper into the Serengeti until all we could see in any direction was grass.
Though the Serengetti didn’t have the same density of animal concentration as the crater, it held a huge variety of animals, many of which came within a foot of our jeeps. We saw lionesses rest near our tires, elephants scoop up grass with their trunks right outside our windows (see the video below), and lion couples mating merely feet from where we were.
Here are a few pictures from the Serengeti:
After our drive through the Serengeti, we headed back to the Haven Nature camp for our last day of safari. Along the way, we stopped at a local Masai village and spoke with the tribe about their way of life. Normally, outsiders wouldn’t be able to visit Masai villages, but this was an area set up to encourage outsiders to visit, and, of course, buy their products. It was an interesting visit – we were greeted with a tribal dance, saw the cow dung huts, and visited the village “school” (essentially an open-air wooden hut). The following day we visited a Masai secondary school and donated a few gifts while speaking with them about their academics. Many of them could barely speak English, but it was interesting to see how they got by.
After our visit to the Masai village, we did one final morning of safari in the Lake Manyara national park. It was a bit more tame, with far fewer game animals, but a large number of primates. Following our safaris, though, we transitioned to the relaxing part of our trip.
On Thursday, we boarded a flight to Zanzibar – Tanzania’s local beach island. When we landed, we transferred to our hostels and settled in. After hanging out at the beach for a while, we got dinner and then settled in for the night. The following day, the group split up – about half the group went on a day-long snorkel/dive trip and the other did a half-day snorkel trip. That night, we all hung out at the beach, enjoyed a final dinner together, and partied it up a bit before heading to sleep.
Dar and Amsterdam
After Zanzibar, we took a day tour of Dar es Salaam. This was interesting for me because my grandmother was born in Dar, so it was nice to see what the city looked like. After driving and walking around the city, which, though the capital, was still far from the large and bustling hub that we expect from a national capital, we went to the airport and boarded a flight headed for Amsterdam.
We had a long layover in Amsterdam – maybe 9 or 10 hours, so we went out into the city to explore. After walking around for a bit, I remembered just how little I missed Europe, but it was nice to be able to go out and explore for a while. I had visited Amsterdam a few years ago as part of my tour of Europe. It’s still the same. Amsterdam is decadent.
That evening, we headed back to New York City.
I still have to unpack. I have to catch up on work. I have to study for finals. But man did I have fun. If you want to see more pictures, head over to my album on Picasa, which you can find here, https://picasaweb.google.com/115138297640686378184/Tanzania?authuser=0&feat=directlinkView comments →
Founded an investment club focused on generating consistent, periodic income by using the aid of custom-developed analytic methodologies and computer programs to trade options
• Generated an average annualized return of 40%
• Coordinated the research and analysis efforts for myself and two partners
• Developed and automated several quantitative analysis algorithms that assist in the investment process by providing rankings of publicly traded companies based on financial fundamentals, listings of stocks with the highest options premiums, and predictions of stock movement based on trending and momentum criteria. Created the algorithms using the fundamental principles of weighted trade studies and later automated them using Ruby on Rails
• Created a website that enables the publication of investment articles and provides access to the aforementioned automated algorithms, a portfolio management tool, and educational resources
• Performed market research on publicly traded companies, focusing on industry standing, historical performance, competitive advantage, and future prospects
• Managed legal, financial, accounting, logistics, long-term strategy, and investment objectives
Software developer and member of founding teamoGolf
Member of the management team on an early stage startup that developed technology to provide data analytics and game management software for golfers.
• Created a website allowing golfers to review a comprehensive set of analytics about their game
• Developed financial projections and investor presentations, presented the new business and software at conferences, pitched to potential investors, and demoed the product to customers
• Developed strategy and marketing plans for growing the business
• Recruited new talent to assist with software development, marketing, and operations
AssociateBooz Allen Hamilton
Provided information and communications management solutions to public and private organizations as an IT consultant at a large, multi-national consulting organization.
• Managed timelines, resources, and a staff of up to 10 software developers and testers in the technical implementation of a project management application that allowed over 4,500 users on 500 projects to easily collaborate on key deliverables, organize project schedules, review budgets, and create financial projections. Coordinated the efforts of staff from multiple departments across the firm to implement a new development process that reduced the number of hours needed to create and test new software by more than 50%, eliminated the need for overtime work, and ensured the timely delivery of new functionality. Received a performance award for ensuring product quality, meeting deadlines, and effectively managing personnel
• Led and managed the technical implementation, logistics, timelines, and activities of myself and two other developers in the delivery of a web-based traffic simulation engine that provided a testbed for industry-specific application developers to test their proprietary algorithms. Received a performance award for “leading the team and ensuring critical deadlines were achieved without sacrificing quality.”
• Assisted in domain administration for a server farm consisting of SharePoint front-end web servers, Microsoft SQL Servers, domain controllers, and a SAN
• Lead developer for a Ruby on Rails and Flex-based application designed to automate the deployment of SOA-based military service offerings. Implemented a RESTful methodology for saving and delivering data to a Flex front end
• Participated in university recruiting and interview efforts for the firm. Provided recommendations that led to the hiring of approximately one-quarter of the total staff on sub-team, as well as the hiring of approximately 30 junior staff straight from college
• Progressively increased managerial responsibilities over the course of two promotions in three years
Software DeveloperWamily, LLC
Member of the management team on an early stage startup that developed web-based group communication, management, and coordination software.
• Worked with a team of web developers to create an Internet business centered on a website that would allow its users to easily manage and interact with their real-life groups in an online setting
• Developed widgets for communication and collaboration, permission models and security implementations, and user interfaces for site features
• Assisted in recruiting 500 alpha users and raising $20,000 in angel investments
• Participated in board meetings to determine long-term strategies
Intern Research AssistantBooz Allen Hamilton
Provided research and development support as a technology intern to a large, multi-national consulting firm.
• Provided a fully functional, database-backed web application for use by overseas military personnel in a shortened timeframe of 3 weeks as part of a 3-person development team
• Created a collaboration site that provided Navy leadership with near-real time critical information to streamline the decision making process in the Navy Gulf Coast Region in the aftermath of Hurricane Katrina
• Designed and created several web part solutions using APIs from Active Directory, Microsoft MapPoint, Microsoft PowerPoint, and Microsoft SharePoint
• Created a Macromedia flash proof-of-concept dashboard for a status reporting application integrated with SharePoint
Researcher and Lead DeveloperUniversity of Virginia
Developed software, created algorithms, and analyzed information management processes that would optimize the battery life on micro-sensor hardware devices as part of a university thesis project.
• Coordinated the efforts of a five-member team focused on developing an approach to optimize the use of resources on wireless sensor networks
• Designed, implemented, and maintained a simulation engine capable of simulating enemy solider movement and sensor network functionality in customized, loadable, user-defined scenarios. The application was written in C#, supported XML-based loadable scenario files, and utilized various optimization algorithms (such as Dijkstra’s algorithm and A*). The simulation engine provided users with an intuitive graphical user interface for simulation control as well as the ability to view and report on simulation progress
• Performed statistical and quantitative analysis on results to determine optimal resource allocation policy for the tested scenarios
• Lead author and presenter of a paper at the IEEE Systems and Information Engineering Design Symposium describing results
Researcher and DeveloperPersonal and Academic Projects
Developed a variety of software for a myriad of purposes on several different platforms and programming languages.
• Developed and tested a C# desktop weight management application using Access as the database backend, and later migrated it to the Internet using PHP and MySQL
• Lead developer on a team that created, documented, and tested robot control and communication software for the Evolution ER1 robot. The software allowed users to remotely control the robot by way of a specially created communications protocol
• Developed a prototype for an interactive Macromedia Flash map that retrieves external data and allows users to easily view them in a geographically organized format
• Created a discrete event queuing model simulation of a dining facility located on campus using Rockwell Arena, based on data gathered and interpreted by the project group
• Created a prototype Peer-to-Peer application based on the Gnutella search and communication protocol in Microsoft Visual Studio .NET using C# and TCP/IP socket programming
Branch ManagerCollege Works Painting
Participated in an internship designed to hone and cultivate the entrepreneurial skills of college students by allowing them to run their own local branch of a large, nationwide business.
• Operated a local house painting business, which generated over $15,000 worth of gross revenue in contracts with 25+ clients
• Responsible for sales, payroll, recruitment, operations, customer relations, and marketing
VolunteerAmerican Red Cross
Volunteered as a member of the executive management board of the youth community service organization of the Washington, D.C. chapter of the American Red Cross.
• Served as president (2001-2002), vice president (2000-2001), and member of a local youth community service organization as part of the National Capital Chapter of the American Red Cross
• Managed and coordinated the execution of various community service projects and their logistics, including fund-raising, logistics, marketing, and management of personnel
• Served as one of five United States youth representatives to the international Youth Exchange in 2000
• Received various formal volunteer recognitions
• Gained skills in leading multi-person projects, effective communication, and time management
Master of Business AdministrationNYU Stern School of Business
Completed two years of a rigorous MBA program at a top business school, focusing on acquiring the skills required to improve my trading activities and start a new business.
• Graduated with specializations in Quantitative Finance and Entrepreneurship and Innovation
• First Year Activities: Associate Vice President of Technology for the Stern Hedge Fund Association and Associate Vice President of Communications for the Entrepreneurs Exchange Club
• Member of the Technology and New Media Group and the Association for Investment Management and Research
• Completed one course on Doing Business in China at the Guanghua School of Management at Peking University
• Studied abroad at Bocconi University in Milan, Italy
Bachelor of ScienceUniversity of Virginia
Completed four years of study in the engineering school, focusing on acquiring software development, statistical analysis, modeling, simulation, and data analytic skills.
• Received a Bachelor of Science in Computer Science and double majored in Systems and Information Engineering
• Received a minor in Math
• Part of a team-oriented effort to improve resource usage in sensor networks. Main author of a paper published at the IEEE Systems and Information Engineering Design Symposium
• Graduated with distinction
• Achieved Dean's List in 3 different semesters
- Name: Shanif Dhanani
- Address: New York, NY, USA
- E-mail: firstname.lastname@example.org
- Phone: 703.477.1438