IRS defined "investor" vs "Trader Status" as it relates to 1256 Contracts.

B

bob2001

On 1256 contracts (examples futures contracts) for "investors" the gains/losses are 60% long term 40% short terms with MTM at the end of the year.

Want to make sure is it the Same if you are qualified for "Trader Status"

For qualified "Trader Status" you still get gains/losses are 60% long term 40% short terms with MTM at the end of the year. Right! You don't lose this benefit, right!
 
thanks needed that. One other question that came to mind.

Am I wrong if you qualified for "Trader Status" you don't get long term anymore if you sell a stock (example you sold IBM where you owned it for more than a year).

What other down side are there?
 
bob2001 said:
thanks needed that. One other question that came to mind.

Am I wrong if you qualified for "Trader Status" you don't get long term anymore if you sell a stock (example you sold IBM where you owned it for more than a year).

What other down side are there?
More...

this is largey true, but you an segregate positions as long term that are not subject to mtm. you should talk to an accountant on how you would do it.
 
bob2001 said:
Am I wrong if you qualified for "Trader Status" you don't get long term anymore if you sell a stock (example you sold IBM where you owned it for more than a year).
More...

newwurldmn said:
this is largey true, but you an segregate positions as long term that are not subject to mtm. you should talk to an accountant on how you would do it.
More...

As @newwurldmn said, trades can be segregated. Talk to an accountant for the most appropriate method for your specific tax circumstance.

One thing to keep in mind... long-term trades are NOT considered/counted as TTS qualification criteria. Only trades of 31 days or less qualify for TTS purposes. In this context, the holding period applies to equities and section 1256 instruments. MTM treatment does not alter the holding period requirement.
 
One final question. Are there IRS requirement for a TTS to file as a TTS and not as a individual investor. In my case I don't meet the 720 count (like 405) AND I have 1256 instruments (future contract gains), and short term gains, and less than 0.1% long terms gains (from mutual funds). So for the reason stated in my OP question above I owed the same amount of tax as a TTS and individual investor (unless I am missing something).
 
No idea, but I assume you're doing your taxes long hand.

If you use software those issues are already handled
when you import your data and then the software
automatically spits out your numbers.

TURBO TAX.png
 
bob2001 said:
One final question. Are there IRS requirement for a TTS to file as a TTS and not as a individual investor. In my case I don't meet the 720 count (like 405) AND I have 1256 instruments (future contract gains), and short term gains, and less than 0.1% long terms gains (from mutual funds). So for the reason stated in my OP question above I owed the same amount of tax as a TTS and individual investor (unless I am missing something).
More...

you miss out on deductions for market data and research.
 
bob2001 said:
One final question. Are there IRS requirement for a TTS to file as a TTS and not as a individual investor. In my case I don't meet the 720 count (like 405) AND I have 1256 instruments (future contract gains), and short term gains, and less than 0.1% long terms gains (from mutual funds). So for the reason stated in my OP question above I owed the same amount of tax as a TTS and individual investor (unless I am missing something).
More...

newwurldmn said:
you miss out on deductions for market data and research.
More...

There are many possible deductions for TTS qualified...
https://greentradertax.com/trader-tax-center/trader-tax-status/trading-business-expenses/

And the benefits of electing MTM accounting although optional, are not possible without TTS...
https://greentradertax.com/trader-tax-center/trader-tax-status/section-475-mtm-accounting/

TTS is an annual qualification based on facts and circumstances in the eyes of the IRS.
There is no checkbox.
 
tiddlywinks said:
There are many possible deductions for TTS qualified...
https://greentradertax.com/trader-tax-center/trader-tax-status/trading-business-expenses/

And the benefits of electing MTM accounting although optional, are not possible without TTS...
https://greentradertax.com/trader-tax-center/trader-tax-status/section-475-mtm-accounting/

TTS is an annual qualification based on facts and circumstances in the eyes of the IRS.
There is no checkbox.
More...

you have to file a form i think though.

my accountants have done it for me. i am TTS qualified but i didn't elect MTM.
 
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