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
  7. FB2020


    I need to do section 475 for 2020 as well (I have losses for 2020).
    Per Green trader's website, the deadline for applying for sect 475 had also been extended to july 15th.
    Does someone has the language for sole prop using TTS? no LLC/entity.
    Also, I need to elect this for both securities and section 1256 contracts.(because lot of losses on 1256, so need to use them as ordinary)

    Also, what are the exact steps to follow for this? Am I correct in these steps?

    1. file 2019 taxes now (by july 15th, 2020). It will be filed as paper (no e-file), and attach a paper statement electing 475 for year 2020. (does 3115 go now ?)

    2. Come 2021, prepare 2020 taxes using MTM.
    - Prepare Form 3115
    - prep Form 4797
    - prep form 481
    these 3 forms (in paper form) go along with the tax return, correct?

    Also, I heard form 3115 also needs to be sent to IRS in Washington. Where to send that? and when does that have to be sent? at the same time as filing 2020 return?

    Do I need to wait for form 3115 to be "accepted"? Or you send 3115 along with tax return and that's it.

    I have lot of 2020 losses.
    I was NOT a 475 in 2019 or prior. 2020 is the first year I am selecting 475. Can I still carryback NOL losses to prior years (2019 and prior), even though I was not a 475 ?
    I have been using TTS status since 2016, but will be electing 475 first time now for tax year 2020.

    I am in NJ, if that matters.

    thank you.