Income is treated separately to deductions. So you would record $130k and deductions $4k as well as anything else you had (donations, last years accountants fees etc etc). One thing to remember is once you are treated as a trader you take all you capital losses and gains that year, so no accumulating losses. As far as I can tell too is you can't switch around too much, so take advantage of your status while you have it. It's also determined by a not entirely clear set of guidelines. I believe it has to do with frequency of trades and the amount you have traded. It has been good getting losses back on bad years though (around gfc times), let me off the hook somewhat. That assumes you are earning a wage and paying tax to reduce you tax bill.
