quick tax question

say you open a position 12/31/02 and you exit 1/1/03. this trade would go on 2003's tax return because it was closed in 2003, correct?

thanks

 

Yes, unless your form of accounting is Mark to Market.

 

Yes, but remember that wash sale rules will still apply to that open trade. This is the case for any trades you hold into the new year.

 

say your form of account is market to market, then how would you account for it?

 

If you've elected to use the mark-to-market accounting method, it's as if a fictional sale takes place on the last day of your tax year. Your gain or loss is the difference between the your basis and the fair market value of your security on that day.

 

Are options required to be mark to market?

My accountant takes care of this so I don't know, but on one of my returns, that was not mark to market accounting, one year there were open option positions that I had to mark to market even though I didn't on the open stock positions.

 

You guys pay taxes owed? Ooops..