I guess he is asking how much hassle it is after you have the TTS and start writing off stuff. I can’t answer because I applied under a corp and writing off expenses under corp is the usual modus operandi. But I would also like to know the answer to his question.
No offense, but there is NO APPLICATION process for TTS. There may or may not be specific accounting change IRS forms that need to be filed in a timely manner, but there are variables, such as type of entity, if any, which can not be answered with a blanket answer. As for hassle... your short paragraph introduces a couple... while you mentioned a "corp", you didn't specify C-corp or S-corp. No matter, for that "corp" to qualify for TTS, the trading account(s) need to be titled in the name of the "corp". That means "corp" banking, external to trading account(s) and individual accounts, must be in place. Further, "corps" file taxes on IRS forms 1120 or 1120S, and filing deadlines are most likely different than individual tax filing deadlines. Oh yea... if you trade futures, a C-corp might not be the best choice, as a C-corp loses the 60/40 tax advantage of section 1256 contracts. IOW... "hassles" exist and start way before the actual inception date of an IRS recognized trading-business.
When one submits form 475(f) it may be accepted or rejected by IRS, is my understanding. Furthermore, TTS status may be challenged later if trading behavior changes. I have C-corp and I only trade equities and equity options. My understanding is that for corporations, at least for C-corp, getting TTS status is not an issue for the reasons I mentioned.
"The most significant problem for investors and traders occurs when they cannot deduct trading losses on tax returns, significantly increasing tax bills or missing opportunities for tax refunds. Investors are stuck with this problem, but business traders with trader tax status (TTS) can avoid it by filing timely Section 475 mark-to-market (MTM) elections for business ordinary tax-loss treatment for securities and/or commodities (Section 1256 contracts)." https://greentradertax.com/how-traders-elect-475-to-maximize-their-tax-savings/ FWIW: Your understanding of C-corp qualifying for TTS is WRONG! Otherwise, EVERYONE would form a C-corp for trading, file IRS form3115 for MTM accounting, and have all trading losses treated as ordinary business loss which can reduce numerous types of income including wages!!!! Quick... sign up everyone you know, before this incredible never before seen loophole disappears!!
I can’t tell you I did extensive research into writing off trading losses from other income, since the idea is to trade for net profits. However, according to below article, it’s in fact possible: “Making the Sec. 475(f) election offers at least one monumental advantage. Sec. 475(d)(3) provides that the gains and losses recognized on the deemed sales are treated as ordinary income or ordinary losses. This rule is extremely valuable because it allows traders (who make the election) to avoid the limitation on the deduction of capital losses. By making the election, traders can use losses to offset all other taxable income without limitation. Moreover, because these are business losses, traders can add to or create a net operating loss that they can carry back two years and forward 20 years.[14] The wash sales rules do not apply.[15]” https://www.thetaxadviser.com/issues/2010/feb/sec475mark-to-marketelection.html
Just to be clear: I am not suggesting people use C-corp. I am just saying that it’s probably best to use an entity rather than applying for TTS as an individual.
Your fact checking has proven me correct. Im not surprised, but good on you for not being lazy. What you seem to be missing or failing to understand is that for a trading business, electing MTM accounting is step 2 or later, if desired at all... Step 1 is TTS qualification. Without TTS, MTM accounting is not a valid election. We are talking about a business being recognized as a trading business by the IRS. Otherwise everybody would be doing it!!!
How do you think you request TTS qualification? Both individuals and entities start by sending 475(f) to IRS. IRS will look at your past tax returns to make determination (my assumption). What’s your understanding? https://fairmark.com/investment-taxation/traders/mark-to-market-election-1/