Scary tax situation I need advice

Discussion in 'Taxes and Accounting' started by Sky123987, Oct 14, 2008.

  1. Basically,

    I just got my taxes back for 2007. Thanks to Traders accounting :)

    I owe A LOT MORE because I didn't elect to do mark to market, so my income was overstated by 70k because of the wash rule. If you want to do mark to market you must state to the IRS that you are doing this by April, 15th of the tax year.

    I really didn't trade that much in 2007, but I did a TON in 2008. I'm currently prop now so I don't have to worry about this because I'll get a K1, but I traded retail from Jan 08' to Jun 08 but my income is going to be a TON TON TON more because in 2008 because I didn't elect mark to market. Is there anything I can do?

  2. Spunky


    You can start by firing Traders accounting. Shouldn't they have told you that?
  3. fusionz


    I don't completely understand why you would own a lot more taxes.
    Wash sales for daytraders shouldn't be a huge deal since your disallowed loss will just be added to the cost basis and
    therefore your loss will only be delayed.
  4. I really don't get it either.

    I'm screwed for 2008 because I did HEAVY trading from jan to june. Does anyone know if I can start an LLC and do mark to mkt and put those trades in there?
  5. Jachyra


    You absolutely cannot do that. If you missed the deadline you're just going to have to eat it for the year.
  6. sg20


    Try filing a Formal Protest Letter explaining your circumstances, also include any proof of record to your IRS assessor.
  7. I dont see how this should cause you huge problems.. so from jan to june you did a lot of day trading... those stocks you were day trading in.. have you made ANY more trades in them since june?

    For simplicity, if your flat in those positions, and have not made any more trades in them since june.. then the wash sale rule is not going to be a problem...

    As each wash trade changed the cost basis of the new position.. if you no longer have any position and have not opened any new positions in those securities.. then the last sale you made would have taken into account all the changes in your price basis.. thus for accounting purposes it will end up EXACTLY the same as if you were mark to market....

    Now if your still trading those securities then what I said will not apply
  8. did your firm prepare your taxes using a specific tax software package? can they e-file them for you? did they send you a paper copy and now expect you to mail it in? or will you e-file?
  9. That is the same as throwing yourself at the mercy of the court. Unless you have a tax attorney relative, or 50k set aside for this purpose, eat it and learn.
  10. Make your check out directly to TARP c/o JP Morgan or Bank of America.
    #10     Oct 14, 2008