Stocks and Futures on Schedule C

Discussion in 'Professional Trading' started by Load_the_boat, Oct 12, 2006.

  1. I've used mark to market for my stock trading from 2002 on. In 2005 I also traded futures for the first time and lost money. Can I just add this loss to my stock trading gains on my Sched C and combine them and put a total on line 1?

    I never elected mark to market for my futures trading so maybe I need to do a schedule D and itemize my futures trades... and have my Schedule C just be for my stock trading income?

    Anyone who trades both stocks and futures please let me know how you are doing it.

  2. You can. If I remember correctly, if you use M2M, you lost the 60/40 tax treatment on futures.
  3. futures go on a separate form.Traders in commodities, including such Section 1256 contracts as futures, foreign exchange and nonequity options, report their trading activity on Form 6781.
  4. Stock trading does not go on Schedule C. Nor does Futures trading. Anyone who told you differently is either a charleton with some other motive in mind, or someone who has no clue.

    If you did M2M for securities, you should be using form 4797 for the trading. Your expenses of course go on Sch C if you are a trader using tarder status.

    If you elected M2M for Securities that has nothing to do with electing M2M for futures. Different election, different forms. Since you failed to elect Sec 475 M2M for Futures these are capital losses, limited as per Schedule D rules.

    If you want the straight scoop you can go to Google and enter [ m2m futures election ] for details.
  5. Traderstatus -
    You say expenses go on a schedule C...are you always then reporting a loss on schedule C since your stock gains or losses are on 4797?
  6. of course...
  7. Note this can trigger an IRS audit (so I've heard) so make sure you really qualify to do it before doing it. Consult a qualified accountant, there are several who specialize in traders (google them).
  8. I selected Mark to market accounting way back in 2000 as well while trading stocks.. i didnt know that you have to also submit a different form for futures?

    wouldnt that be the same 3115 form with an attached letter stating "commodities" instead of "securities"

    what are the exact forms and procedures for a futures trader?

    i keep getting links on what to do, but its still not clear.

    what are the steps?