Hi all,
If I trade stock personally, the max tax for stock short-term capital gain is almost 40% if I am at the highest tax blanket. I have to sell some stocks in less than 1 year even though I also promote long-term investment. So, I come out of an idea... why not start some kind of one-person LLC investing company and trade stock as a company?

I am wondering if I will pay lower tax this way?

What % of capital gain tax does a LLC or corporation pay? Is it lower than personal capital gain?

The reason I asked is that Warren Buffett said that he is paying 17% as tax with $100K salary (last time I heard). His secretary is paying more tax with her $60K salary. How can that be? He has billions of profit each year!!! He is a honest man, and he is definitely not cheating IRS. So, why don't I do the same thing?

I have thought of SEP, or IRA as some of the ways to defer tax if I have a company.

Any more suggestions?

Thank you.

TheDealMaker said:What % of capital gain tax does a LLC or corporation pay? Is it lower than personal capital gain?With an LLC, you have a choice: either treat it as a corporation or have it disregarded. If it's disregarded, it doesn't pay anything; you pay tax exactly the same as if you had earned the income (capital gain or otherwise) yourself.

With any corporation, there's no capital gains preference; all income is taxable at rates that go up to 35%, including long-term capital gains. Then, when the money is distributed to you, you pay another 15% on that.
The reason I asked is that Warren Buffett said that he is paying 17% as tax with $100K salary (last time I heard). His secretary is paying more tax with her $60K salary. How can that be? He has billions of profit each year!!! He is a honest man, and he is definitely not cheating IRS. So, why don't I do the same thing?Because he's bending the truth beyond the breaking point to advocate his anticapitalist goals. His ignoring completely the taxes the corporation pays on its income, but he's counting social security as a "tax," which is really a kind of forced savings.
I have thought of SEP, or IRA as some of the ways to defer tax if I have a company.You can only have one (with a disregarded LLC) if you have a "trade or business." If you do, then you could have them equally well without the LLC.

When I first saw the title I thought it was going to from B-cubed.

Start a hedge fund. Profits are taxed at only 15%.

:]