M2M election Template

Discussion in 'Taxes and Accounting' started by vm81, Mar 12, 2019.

  1. vm81


    I have an LLC that trades in securities (stocks and options) only. This is the 1st time I will be electing M2M and I know I am supposed to file it by March 15th.

    Does anyone have a template that they recommend. I know we have to attach it to the LLC return or extension - but not sure if people prefer certain template to use for the election.

  2. tiddlywinks


    Election statement...

    “Under Section 475(f), Taxpayer elects to adopt the mark-to-market method of accounting for the tax year ending Dec. 31, 2019, and subsequent tax years. The election applies to the following trade or business: Trader in Securities as an LLC/sole proprietor/corporation/etc (for securities only and not commodities/Section 1256 contracts).”

    Existing taxpayers complete the election process by filing a Form 3115 (change of accounting method) with the election-year tax return.

    The Section 475 election procedure is different for new taxpayers like a new entity. Within 75 days of inception, a new taxpayer may file the Section 475 election statement internally in its records. The new entity does not have to submit a Form 3115 because it’s adopting Section 475 from inception, rather than changing its accounting method.

    Adam E. Spence CPA likes this.
  3. vm81


    Thanks a lot. This is pretty much what I have from Green, but I read somewhere that his election statements are not ideal - so thought I will ask around.

    I guess I will go with this.
  4. vm81


    Also - a clarification. Should it say Trader in Securities as an LLC OR Trader in Securities as an entity
  5. tiddlywinks


    I used "LLC". Entity is too vague, IMO. You are attaching this to the "LLC" (1065 or 1120/s) tax return. :)

    What was important (for me) is the inclusion of "for securities only and not commodities/1256 contracts" portion.

    vm81 likes this.
  6. vm81


    So I decided against electing M2M last year (really should have) but definitely going to do it for this year. I have the statement that needs to go with 1065 but Form 3115 that goes later is confusing. What do I fill out on that form?

    Also, I understand with M2M you report on 4797 Part II - do I list every trade individually (1000s) or is there a more time efficient way of doing it?

    Thank you