Tax: reporting year end open trades

Discussion in 'Chit Chat' started by newtrader757, Apr 29, 2010.

  1. Hi:

    I am a new/aspiring day-trader. I dont know how to include the trades that were open when 2010 rolled around. I have populated my schedule D with all the trades from 2009 except those that i bought in 2009 and remained open through to 2010. how do i handle these?

    Thanks for your help.

    I also want to learn about options trading.
  2. morgen


    If you are a day-trader, you can mark to maket your open trades at year end, With the MTM election in effect, the stock held on the last day of the year is deemed sold on that date.
    Now the trade remained open from last year, which depends.
    If you hold it for more than 1 year, this will be consider as long term capital gain or loss,
    if you hold it for less than 1 year, this will be treated as short term capital gains or losses.
    Long-term capital gains occur when you own a position for longer than 12 months and one day and sell it for a gain. This is considered a long term capital gain and is taxed at a tax rate of 10% at the low end to 20% at the high end.

    If you trade 1256 contracts, (commodities & futures) all gain or loss is treated as 60% long term and 40% short-term capital gains and losses.

    If you trade options on "cash settled indexes" they too are taxed the same as 1256 contracts. This type of trading is certainly advantageous to the typical trader who may be trading in indexes but does not know of this benefit.

    and if the loss occur, you deduct unlimited losses if u are a mark to market trader.

    Hope that help you !
    I think you can use some software like TradeMax to handle your transactions and make your life easier.
  3. if you havent elected mark to market you do not list open trades anyplace.