I've been an investor for the last couple years and I am looking at getting started in to swing trading/potentially day trading. The issue I face is I want to keep my long-term capital gains benefits on my investments but also want to swing trade the same stock ticker. I heard that creating an LLC and trading on an account owned by the LLC will help separate the taxes from my long-term investments.
Is this true? Or being that an LLC is a pass through entity, it doesn't matter regardless of if I trade with the LLC or my personal account
As far as the IRS is concerned, a single member LLC is a disregarded entity. So from the IRS perspective when it comes to taxes, there is no pass-through entity. Money earned/lost by the LLC is the exact same as money earned/lost by you. So there is no real benefit to you on this that I can see. Now if you state taxes personal income, you would need to get with a tax planner or tax professional in your local area to be educated on the pros and cons. But from the federal side, an LLC owned by a single individual for the sole purpose of investing is a waste of your time and money. Not to mention the additional paperwork that will be required of you at tax filing time. Remember, more paperwork equates to more possibility of mistakes. Probably best to utilize the KISS method.