There are three different things you have to do in your 1120S:
- Form 3115
- Attach a statement making the mark-to-market election under Section 475(f)
- Attach a statement containing all of your trades, i.e., a spreadsheet converted to a PDF or a paper attachment
If any one of these cannot be done with an electronically filed return, then you will have to file the return by mail.
I can't tell you whether TurboTax can do all of them on an e-filed 1120S. But I can give you some guidance and point you in the right direction.
Form 3115 can almost certainly be completed within the program. You will not have to fill out the form
manually. Whether it can be filed electronically is a different matter. When you get to the point where your return is complete, TurboTax will tell you whether the return is eligible for electronic filing.
If Form 3115 cannot be filed electronically, you may be able to file the return electronically and then mail in Form 3115 with Form 8453. If that option is available, the program will tell you, and it will print Form 8453 for you. Form 8453 can only be used for certain paper filings. You have to check a box indicating what you are mailing in, and Form 3115 is one of the choices.
The mark-to-market election is a simple statement that has to be included with your tax return. Instructions for how to write it can be found in IRS Publication 550. You may have to reach out to the support team at TurboTax/Intuit to see if this can be done in the program. Here again, even if it can done in the software, it may not be eligible for e-filing. You may have to print the statement and file the entire return by mail. Form 8453
cannot be used for this purpose. If can't be done within the program, you can still complete your return using TurboTax, and write the statement yourself (using MSWord or whatever). But you'll have to file the entire return by mail.
Try performing a search within the help screen in TurboTax for the phrase "mark-to-market" or the phrase "miscellaneous elections," and see what you get.
The spreadsheet containing all your trades also needs to be attached. You enter the
totals on line 10 of Form 4797, i.e., gross proceeds, cost basis, and net gain or loss. The instructions for Form 4797 specifically allow you to do this. On line 10, you enter "Trader--see attached," and then you enter the totals in each column.
The question is whether the statement showing each transaction can be attached as a PDF and transmitted electronically with the return. Here again, you'll need to rely on the onscreen instructions in the program, or reach out to Intuit support.
As you know, retail traders use Form 8949/Schedule D. But even retail traders who have have not made the MTM election and do not have trader tax status can easily have hundreds of transactions. The IRS explicitly allows retail traders to do the same thing: enter totals on Form 8949 and attach a spreadsheet statement. In most tax software programs, that statement can indeed be attached as a PDF, and the return can be filed electronically. We do this all the time for retail traders by simply attaching a PDF of Form 1099-B provided by the broker. For a retail trader, the Form 1099-B
is the statement. But I am referring to a Form 1040 with a statement attached to support the totals on Form 8949. I don't know whether TurboTax will support such an attachment for a Form 4797 that is part of an 1120S. If there is no way to attach it, you will have to file the entire return by mail.
If there is a way to attach it, there should be an option, within the program, on the screen for Form 4797, where it asks you whether you are entering each transaction one at a time or entering totals from a summary or an attachment.
Hope this helps.
BMK
