I am going to start trading retail after getting a K-1 for the past several years. My question is should I file a M2M form? When does this have to be done? What exactly does it do? Are their any drawbacks? -Guru
Do it by 4/15! I have this myself. http://www.irs.gov/taxtopics/tc429.html "In general, the mark-to-market election must be made by the due date (not including extensions) of the tax return for the year prior to the year for which the election becomes effective. The election is made by attaching a statement either to your income tax return or to a request for an extension of time to file your return. The statement should include the following information: That you are making an election under section 475(f) of the Internal Revenue Code; The first tax year for which the election is effective; and The trade or business for which you are making the election. "
I'd also be interested in hearing if there are any drawbacks to MTM.....like are you stuck with it permanently?
www.traderstatus.com Click on Electing Market to Market link on left side of Home Page...Good overall sight for trading ?'s...
basically once you file mtm you have it forever unless you send a letter to the irs and try to reverse it which is tough. but there's no drawbacks really to mtm as you can specify long term accounts for the favorable long term rates and you can segregate futures accounts with the 60/40 long term/short term rates. 2 nice things about mtm is the nol carry back loss if you lose over 3k and you're not subject to wash rules
I had mtm from 2001 til 2003 when I traded for myself. My accountant filed the proper forms to take me off it in 2004. The real advantage of mtm accounting is if you have a bad losing year you can offest those losses with the previous years gain and get money back. I never had this happen to me but I know a few traders who used mtm to their advantage.
Is there anything I have to do after making a statement to elect M2M status? I think I read something about filing a form 3115? -Guru
you file 3115 with your 2009 tax return. you send a copy in with your 2009 return and one to the irs headquarters in dc. what you're filing now to ask for mtm accounting is just a request. if you change your mind and don't file the 3115 with your 2009 returns it never takes affect.
I have evaluated and confirmed my desirability and eligibility for MTM for 2008 so need to file MTM election but ... I have dilemma about How to word the MTM election statement in joint filing case. Specifically, If my spouse and I file jointly but only I trade for a living but trade within 4 different brokerage account of which 3 are spouse primary and in 1 brokerage account I am primary, how best to file the MTM election or does it not even matter i.e. the MTM election does not need to be tied to one tax id? any and all help at this late stage is very appreciated. TIA.