475 Trader Status , no longer active. Is 'suspension' automatic?

JackMorgan

JackMorgan

Haven't been very active the last few years, but continued to use 475 Trader status and form 4797 to file .

Technically , I no longer qualify as TTS. It would also benefit to file regular way as there is a net loss, that would be available for carryover that would probably be lost if using 4797 to file.

I know there is a formal TTS revocation procedure that would need to be filed in a timely manner, but if you simply stop trading actively , is the SUSPENSION of TTS automatic, and then you simply file using the Schedule D method ?

Apparently this suspension is a thing, but can't find much about in online .

Googled it and information is pretty sparse other than this link from GreenTraderTax 2015

https://greentradertax.com/new-irs-rules-allow-free-and-easy-section-475-revocation/

Has anyone here had any experience with this or knows a better reference to it ?
 
nooby_mcnoob said:
With the tax man, it is better to be explicit. Is there some reason you want to "assume" it is suspended?
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It is better or worse depending upon circumstances. Your response is one more example why advice on ET should be taken with a grain of salt.

There are obvious reasons why someone would want to have his status suspended.
 
zdreg said:
It is better or worse depending upon circumstances. Your response is one more example why advice on ET should be taken with a grain of salt.

There are obvious reasons why someone would want to have his status suspended.
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Have you had experience with the tax man assuming something incorrect? Are you aware of the cost of fixing such things?

So, if you want to suspend your election, then do it.
 
nooby_mcnoob said:
Have you had experience with the tax man assuming something incorrect? Are you aware of the cost of fixing such things?

So, if you want to suspend your election, then do it.
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Never assume anything with the tax man unless it is in writing. Since I am not a tax accountant I will not assume even that statement is 100% true.
 
zdreg said:
Never assume anything with the tax man unless it is in writing. Since I am not a tax accountant I will not assume even that statement is 100% true.
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That is what I am saying.

Make sure the tax man knows your intention and agrees. I (almost) had to learn this the hard way.
 
[QUOTE="nooby_mcnoob, post: 5569489, member: 230196"

So, if you want to suspend your election, then do it.[/QUOTE]1. Ask the IRS how to do it Ask a tax accountant. Ask on ET.
 
I am not an accountant, but my understanding is that if you've made a valid election under section 475(f), the only way to stop using mark-to-market accounting for securities is to file an automatic request for revocation under Revenue Procedure 2019-43, Section 24.02. Which I read to mean you need to file another form 3115 revoking your MTM selection.
 
If you go to that link provided, and read what Green wrote in 2015 , there is the suggestion that not actively trading triggered a suspension. It's not clear whether that has to be a formal declaration or not.

"Prior to this rule change, our trader clients avoided the costly and uncertain revocation procedure in two ways: by trading less and falling short of qualification for TTS, thereby “suspending”the Section 475 election;"

The whole reason for possibly doing this, is a net loss that I won't be able to carry over under 475 rules , as the NOL calculations appear to wipe out most of the carryover.

I don't see any way to use the usual $3000 limit on losses and carry over the rest if filing with Form 4797 (Mark To market)

This is for 2020 no less, since I've been sitting on the filing due to circumstances beyond my control . No tax is owed , so I wasn't concerned about late filing

Thought someone here might have used this suspend 'feature' and had some insight.
 
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