$3,000 Capital Loss Deduction after MTM election

Discussion in 'Trading' started by trtiger7, Mar 9, 2010.

  1. trtiger7


    Hello all,
    Last year I've requested to change to mark-to-market accounting.

    This year it's going to be the first time I'm going to file according to MTM.

    Last year I filed Schedule D as usual and I had some losses. Of course they are under the category "Short-term capital loss". In Mark-to-market every gain / loss is considered "ordinary income."

    My question is can I still deduct $3,000 Capital Loss from the previous year in my mark-to-market tax filing for this year.

    Thanks in advance, have a good day
  2. Surdo


    If you have capital loss carryover from previous years, up to $3,000 may still be deducted vs ordinary income, in addition to the "ordinary income" from MTM trading. If you have no income and both types of losses, you have a NOL!

    ***Talk to a CPA and DO NOT depend on this website for tax advice, most advice is wrong!
  3. trtiger7


    Thanks for the info Surdo...
  4. Although an MTM trader reports gains and losses as ordinary income, you did not suffer the 2008 losses as an MTM trader. They remain as capital losses which can offset new capital gains but not more than $3000 of ordinary income per year.
  5. Surdo


    If you have a large capital loss carryover, it really DOES NOT make sense to switch to MTM accounting.