OK...so here are a few things I've gathered thus far....if someone can please verify these things for me...I'd really appreciate it.... 1. As a trader w/o M2M election, all my gains will be considered a capital gains and should be reported on Schedule D at a rate of 28% 2. All my trading expenses should be reported on Schedule C (Profit or loss from business (sole proprietorship) instead of Sched. A "itemized deductions") 3. Since I haven't elected M2M the previous tax year, I am subject to the "wash-rule" which doesn't allow me to deduct my loss for a losing trade, unless I don't touch that same security for 31 calander days. If I do decide to trade that security again within the 31 days, the loss from the previous trade will carry over to the price that I enter the "new" trade. This will continually carry over until I make a trade, of said security, that is net positive or when the 31 days pass. 4. I should use a program such as "Trade Log" to help account for wash sales. 5. Since I don't have M2M status, the total capital gains loss I can claim is $3000. How'd I do? Any and all help will be most appreciated. Thanks in advance!!
You might want to focus a bit on making profits before worrying about how you are going to file your taxes. You should be so lucky to have that problem.
If you have a decent broker, most of the tax stuff they'll take care of come tax time. I mean, they'll print out an unofficial Schedule D for you and all you need to do is match it up with the total sales that they send to the IRS. You might need to make some minor adjustments. If you trade futures, then it's a lot more simple than that.
I use IB as my broker. I read somewhere that IB doesn't calculate for wash sales. Am I misinformed? I did notice you said quality broker....does IB count? I joined IB because most people seem to use them on this forum. Should I look elsewhere? They're cheap if you use their data, but I use ESignal for my data. (IB data feed/charts suck....) I've been pretty happy with them thus far, considering I only use the portfolio window. Are there other brokers I should look at that have an all-in-one solution? (IE Good data/charts and fast executions w/ decent commisions?) Considering how much I pay for Esignal...if there were another firm with an all-in-one solution, it would be more econimical even if I paid .007 or even .01 per trade. (I only make 20-30 trades a day) I know the cost of Esignal is not that much, but I'm a businessman at heart and there's nothing wrong with minimizing your overhead. Almost makes me want to get a series 7 and join up with Don and his crew. My buddy actually trades here in Miami through Don and he seems to like his setup. (I think it's called Redi)....
I don't quite remember since I barely trade stocks but I believe they do include the wash sale rule now. Take not, the schedule D is for your reference only. You are highly encouraged to check everything and make sure it matches up with the 1099. As far as broker quality, IB is pretty good except for their customer service but overall, I can't complain.