I plan to start a new LLC in October 2015 for my trading account and will make a note in my logs that I want to use mark to market election for my accounting method for tax filing of 2015 and going on wards when I file taxes before April 15, 2016. Does anyone have experience in retroactive mark - to - market election. I talked to a couple of CPAs and in my small town seems like no one has experience regarding that. Anyone know of a CPA who has helped them with this.
I thought you had to elect for a calendar year before you file your tax return. So for 2015, you had to do that by April 15 2015. There might be another process to do this now, for 2015 that I'm not aware of.
You're best off using a professional to do this. I used Green & Co a couple of years back. The formation docs are very specific to a Trader Entity. If you botch the initial setup and legalese, there's a chance it may not be a legit 'Trader Entity' in the eyes of the IRS.
Since the LLC did not exist before April 15 this year so there is no way I could have asked for mark to market election. So, the first instance I get to ask for mark to market is next year when I file taxes.
One thing to watch out for with an MTM LLC is that your gains become "ordinary gains" which don't necessarily offset any negative "capital gains" outside of the LLC -- for example, if you traded futures outside of your MTM LLC, which I think could make sense, at least in some cases. Of course, the "ordinary gains" status is very useful in some other types of scenarios, as you're probably aware.
A new taxpayer must place a statement in their books and records within the first 2.5 months of the first taxable year indicating the 475 election is being made, the effect year, and to what business it will apply. This election will get attached to your first tax return. The election is effected when placed in the books and records.