EQUITY AND FUTURE AND OPTION TRADERS BALANCE SHEET AND PROFIT LOSS AC PREPARATION

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This discussion addresses the complexities of preparing balance sheets and profit & loss statements for clients engaged in equity and options trading, especially when significant losses need to be carried forward. The core question revolves around whether to include all personal assets and liabilities or only those directly related to the trading business. The advice suggests preparing financial statements specifically for the trading business, allowing for separate reporting of trading losses and potential use of Section 44AD for the construction business.

Dipak Gulhane

Dipak Gulhane (Querist)
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07 July 2024 My Client is doing proprietary business of Construction Material whose Turnover are 20 lakh and profit is 5 lakh. He also get Salary from Private Company of Say 5 lakh. He also engaged in Equity trading in all Intraday, F&O, Short Term/Long Term. He is loss in this of Rs.20 lakh which i wish to carry forwards after any set off. As I need to prepare Balance Sheet and Profit loss for losses carry forward (otherwise 44AD can b filled), the question is, Which Assets and Liabilities shall be included in Balance sheet (All his Personal Assets and liabilities) or only for that which are related to his Construction or Equity Trading Business or Both. Can I show his construction Business in 44 AD & His Trading losses in Profit Loss separately. I m very confused as If detailed of his all Balance Sheet and Profit Loss need to be reported it a very risky proposition as we need to verify each and every minute details of his all assets and liabilities & clients may not be available with all such records handy and also in general clients dont ready to pay reasonable fees for such work. Also due date is very short for managing all clients as I file 1000 ITR within due date & many of my clients has such a situation which is just non manageable.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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07 July 2024 1. Yes, you can file trading business under sec. 44AD IT act.
2. For shares trading business prepare the financial statements only related to that particular business.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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28 August 2024 Good luck.

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