If you don’t meet the definition of “Trader” in the eyes of the IRS, you are an “Investor”.

Investors typically buy and sell securities and expect income from dividends, interest, or capital appreciation.

They buy and sell these securities and hold them for personal investment; they’re not conducting a trade or business. Most investors are individuals and hold these securities for a substantial period of time.

Sales of these securities result in capital gains and losses that must be reported on Schedule D (Form 1040), Capital Gains and Losses and on Form 8949, Sales and Other Dispositions of Capital Assets as appropriate.

Investors are subject to the capital loss limitations described in section 1211(b), in addition to the section 1091 wash sales rules. Commissions and other costs of acquiring or disposing of securities aren’t deductible but must be used to figure gain or loss upon disposition of the securities.

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