Futures , Taxes, and Mark to Market

Quote from stock777:

Maybe someone wants to take a stab at this.

Let's assume that someone elects MTM for stocks and not for Futures, keeping the 60/40 short/longterm split advantage.

They make 20,000 trading stocks (all short term gain) and lose 10,000 trading futures.

What are the tax implications there? Do you deduct the entire 10,000 loss against the 20,000 gain? I think this boils down to how are long term losses deducted against short term gains.


If you've elected MTM for all transactions, then I would think you would net everthing together to get the tax liability.
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Dug this thread up as I'm doing research on electing MtM or not.

As I understand it, I don't think anyone answered this correctly (let me know if I'm way off).

You elect MtM on stocks. You have a 20k gain which is converted to ordinary gain.

You don't elect MtM on futures. As a result, gains/losses on futures remain capital gains/losses. So if you lose 10k, you are capped at 3k to deduct against your ordinary loss.

Your outcome is 20k-3k=17k. So you are taxed on 17k at your ordinary tax rate.
 
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