Futures , Taxes, and Mark to Market

Discussion in 'Index Futures' started by stock777, Aug 10, 2002.

  1. o_2_b_sean, I wish I could tell you more about this , but I'm no expert on tax law. Al least you are now aware of the issue.

    I would tend to doubt that you can segregate futures and stock trading when it comes to this MTM issue. You can apparently have a distinct long term investments, not MTM ,as long as they are in accounts clearly defined for that purpose, and not daytrading.
    #11     Aug 22, 2002
  2. You can segregate MTM treatment of stock and futures. The two are under different definitions as one is an equity and the other is a commodity.
    #12     Aug 22, 2002
  3. Thanks for the clarification cracked.

    I will still do my due diligence though, don't worry. Maybe I should order that greentradertax guide...
    #13     Aug 23, 2002
  4. The question seems to be the 40/60 short/longterm tax treatment , not MTM.

    That's what needs clarification.
    #14     Aug 24, 2002
  5. I must say, this has been one of the most depressing threads ever started on this site. The IRS has no concept of trading capital. Try to explain to them that just because I had a good quarter, I may need some of that for my next drawdown.

    I still can't get a straight answer on this. I have never signed an MTM form, but the answer I keep getting is all futures are marked to market and there is no choice.

    The biggest mistake I have ever made in trading is not understanding tax laws.

    It just seems like understanding them totally takes me out of my groove, so I just keep ignoring them. And there is no such thing as simplifying taxes.

    Sometime I'll tell you about the time I hired a high school student to do my schedule D. (Well, the accountant at the time was charging me $95 per hour, and he was writing down every trade. I said, "Your making more money just writing down the trades than I made making them!") Later I found out you don't have to write down every trade.
    #15     Aug 24, 2002
  6. LOL! Yep taxes sure suck. However, the upside is that they pay for the bombs we drop on terrorists, public sanitation, etc, etc

    Stock777, the issue is both. The marking to market is what could cause the long term tax treatment to be changed to ordinary, short term capital gains. So therefore, if it is indeed possible to separate equity and commodities like Cracked says, then the implication is that marking equity to market might not effect the long term tax treatment of the commodities. That is how I am understanding it anyway? Did you get that greentrader guide? Feel like sharing it? :D
    #16     Aug 24, 2002
  7. There is an upside to taxes ...
    #17     Aug 25, 2002
  8. Sanjuro


    I'm lost. What was the conclusion here?
    I elected MTM last year.
    I'm considering trading NQ but I'm wondering if I
    lost the 60/40 tax advantage because I elected MTM.

    According to that link, it sounds like it turns into ordinary
    gains now with no advantage.

    But when I made my election, I only specified securities.

    So HELP! Did I lose my 60/40 advantage with MTM?
    How are you people who elected MTM and trading
    futures handling this?

    #18     Aug 26, 2002
  9. Depends on your accountant ...
    #19     Aug 26, 2002
  10. MTM on futures nullifies the 60/40 treatment according to "THE CODE". All P&L is ordinary gains.

    You may or may not have been deemed MTM depending upon the form of the letter written to establish MTM. If you CLEARLY stated securities only, that DOES NOT establish said treatment for ALL trading activities. You can be MTM on some accounts and not on others... it all depends on your letter. It pays to be specific in the letter as to the affected accounts.


    #20     Aug 27, 2002