MTM question

Discussion in 'Professional Trading' started by kooltrader, Jun 2, 2005.

  1. How long does it take for IRS to accept/deny MTM accounting change?
    I sent the request right before april, 15th.

  2. kubilai


    From what I read, they don't accept nor deny it. After you file your MTM return next year though, they'll decide whether they want to challenge it by attacking your trader status, that is if they think they can collect enough taxes/penalties to be worth the while ;)
  3. I agree. The trader's M2M election is automatic, they do not "accept it" or "reject it" per se. That's why it is imperitive to use certified mail return receipt requested to support your properly prepared and timely made election statement.

    Even if you fail to correctly format the election statement, or make it too late (or too early) or otherwise do something invalid, the IRS simply is not going to respond to you about it.

    Said another way - the IRS computers have no idea if you made the election of not. The taxpayer himself is obligated to make a proper election and is obligated (for life) to maintian credible evidence that he made a valid election, to be presented to the IRS upon request.

    Also, be aware that the IRS does have a time-stamped copy of what you mailed to them, including the mailing envelope and its postmark. This must jibe with the evidence you present upon request!
  4. so, if in 2005 I have loss, for exemple, IRS could say that I can't take the loss in one shot because I don't qualify as a day trader?

    Thanks all .
  5. It is a fact that if you do not qualify for trader status but instead are investor status, then you do not use Sec 475 M2M, and therefore your net loss is generally maxed out at $3,000 for the year.
  6. kubilai


    Look up

    That's the best site I found about this subject. I even read their trader tax guide, very informative.