How many of you are classified as traders?

Discussion in 'Options' started by ferrycorsten, Mar 7, 2013.

  1. Is anyone here a trader and using MTM? Are you happy with your decision?
  2. No one? Not even sle, atticus?
  3. what are you talking about?
  4. I'm referring to being a trader for taxation purposes and making the mark-to-market election.
  5. Of course futures and futures options are mark-to-market under section 1256 with 60 / 40 capital gains.

    Robert Green says:

    "This 60/40 split gives commodities traders and investors an advantage over securities traders. For this reason, most profitable commodities business traders don’t elect MTM IRC 475. With 475, commodities trader can have “tax-loss” insurance (ordinary loss treatment), but they are reluctant to give up their beneficial tax rates on gains (the 60/40 split)."

    But probably you are referring to stocks.

    He mentions that you can (if qualified in the case of stocks) adopt one approach for futures and the other for stocks:

    "......That trader might elect IRC §475(f)(1) for securities only and not elect IRC §475(f)(2) for commodities. That taxpayer would then have capital gain or loss treatment on §1256 contracts for commodities and ordinary gain or loss treatment on §475(f)(1) for securities."
  6. I'm a CPA....I already know all this

    What I want to know is......who here went trader/MTM and are you happy with your decision? Any regrets?

    P.S. Futures traders don't always need 475 to have tax-loss insurance...if you have 6781 income in prior years you can amend for a refund.
  7. That's good.

    I'm just giving some background for those who do not........I think it needs some context to be discussed meaningfully....
  8. You're right. I apologize. Context was subpar. It's really late...