Hi all, Its February 16th 2019 and I have been a full time trader that would definitely qualify under Trader Tax Status. If I elect to have Mark to Market but lets say I blow up my account in May 2019 and stop trading. Can I still qualify to take my total loss as my write off instead of the $3k investment write off? Can I deduct business expenses during that time only? I appreciate in advance.
I am not a tax professional. However, I can tell you this based on my personal research of the matter, If the you get audit by theTax man, then your chances of proving to him that your claim of the Trader Tax Status is correct, is slim to none! in other words, the burden of proof is very high. You can google the subject, there are plenty of court cases of such claims on the net, and then you can see where you stand compared to them. Good luck!
Not a tax expert. Here is my opinion. If you stop trading and shut down your trading business completely, then it seems like you would be entitled to write off all the losses under your business. However, if you continue to trade after this blowout and you don't trade enough to qualify for trader tax status, then I think the IRS could legitimately deny you all the benefits of TTS for the year.