(3k for 20 yrs.?) You should be able to deduct it all in one year, even get a big tax refund from the taxes you paid last year. That's because you acted intelligently and made a timely MTM election with the IRS. You did make a timely MTM election (or not!!, yikes) .
"I have to deduct 3k for 20 years..." No, you don't, IF you are a pattern day trader and made the Mark-to-Market election. Like the OP was inferring, you did make the Mark-to-Market election, right? "...if a trader makes a timely mark-to-market election, then he or she can treat the gains and losses from sales of securities as ordinary gains and losses (except for securities held for investment - see above) that must be reported on Part II of Form 4797 (PDF), Sales of Business Property. Neither the limitations on capital losses nor the wash sale rules apply to traders using the mark-to-market method of accounting. In general, a trader must make the mark-to-market election by the due date (not including extensions) of the tax return for the year prior to the year for which the election becomes effective." https://www.irs.gov/taxtopics/tc429.html
The same strategy does not work for all market conditions. This is learnt overtime, adjust your strategy for each market condition. This will reduce over all return but also mitigate risk. All seasoned traders go thru this up/down scenario. Welcome to the markets.
I'd say, take out 30k for yourself ( do whatever with it except trading or any type of gaming). Divide the 60k in 3 packs of 25k, 25k, 10k. Restart what you've done with 25k: you have two chances. You lose these, walk out with the last 10k.
Steve: I feel your pain, Unfortunately, although all the brokers do a terrific job of having their customers sign all kinds of agreements and disclaimers that make them not responsible for anything, they don't have to be licensed or considered culpable in any manner by simply directing a new account holder to the IRS site upon opening their trading account. It's sad. Further as most people go into trading thinking [lose ..not me..I'm different!] , by the time they have a significant lose it is too late to file for MTM election in the year of the lose. Most everyone misreads the paragraph as [great!] I have until April 15th to take care of last years loses. NOT SO! You have to PRE-ELECT, meaning if you had loses in 2016, you had to do all the IRS election processing by April 15, 2016! I guess this simple piece of life changing advice is not in the Broker's advertising budget.... HG
Yes, it's easy to overlook that nuance in the IRS paragraph. I fully agree with your point that it's a "simple piece of life changing advice." If they added this simple disclosure on the broker's agreement (without providing any legal or tax advice), then it would be great for day traders. It could read something like "consult with your tax professional if your account is flagged as a pattern day trader." Of course, it would only be of significance if any trader opening a margin account actually reads all the fine print disclosures!
By the way, I wiped out most of my account last week. I am officially staying away from penny stocks now.