What is required to get "trader-status" ?? Are you guys talking about when you make more than 4 round turns in 5 days and your account is labeled as Pattern Day Trader???
No, that's when you are required to have $25K in your account because you are deemed a day trader. I want trader status because what is important to me is being able to change my accounting method to Mark-to-market so I will not have to have to deal with "wash sale" rules and I can use a simpler schedule C on my tax return. To answer your question about what is exactly is required, I don't 100% know but am looking into it. It's not a clear cut set of rules, but in my case being a day trader and having trading as the only source of income looks to be enough.
So is trader status just a designation with the IRS? Does it require the professional trader's liscense? My understanding of wash sale is that the losses can be added right on to the next trade>>>>>so lets say I trade AAPL both shorts and longs all through 2008 and nothin else. Say I make 2500 trades and lose $10 on each of the first 2499 trades; but then in Dec. of 2008 I make one huge bet on AAPL and more than win it all back>>>then there aren't any non-deductable losses. Right??????
Found some good information here: http://www.thestreet.com/basics/tradertaxes/716334.html and here: http://www.tradejuice.com/traders-tax/claim-defend-trader-status.htm
That's what I did, and never had a problem. You just take the loss out of the cost basis on the next trade.
and the next trade could be a short or a long! but if before the end of the tax year comes you better have made all those losses back that you were carrying forward or else you can't deduct them in that tax year
You can deduct up to 3000, and carry the rest forward into the next year. I misunderstood this at first, and went back and revised a previous year and received a refund. You can also carry the loss into the next year if your last trade of the year is a wash. For the OP, you need to read up the IRS rules. If you traded other "similar" (i.e AAPL, RIMM) you can add the loss into the cost basis of those stocks. So unless you traded tech, and the nswitched to oil stocks, you should be able to absorb those losses.
From the IRS website re wash sales and trader status.. http://www.irs.gov/taxtopics/tc429.html http://www.irs.gov/instructions/i1040sd/ch01.html#d0e440