Mark to Market: based on trades made in 2018?

Kristian_S · Mar 27, 2018

Hi, I'm a relatively new day trader and have been actively trading in 2018. Based on my trading in 2018 I would be classified as a day trader in the eyes of the IRS. However, in 2017 I made maybe a dozen day trades. Does anyone know if a Mark to Market election can be filed based on trading history from 2018? Unfortunately the CPA's I've called don't have any consultation time available before April 15, hence my question here.

I appreciate your help!

Overnight · Mar 27, 2018

Best bet is to do this thingy...https://www.irs.gov/pub/irs-pdf/f4868.pdf

And then call around your area and find a CPA that knows about the tax issues you be facing this year.

The only thing I can tell you for sure is that any trading you have done in calendar year 2018 will not need to be reported until mid April, 2019.

tiddlywinks · Mar 27, 2018

Kristian_S said:
Hi, I'm a relatively new day trader and have been actively trading in 2018. Based on my trading in 2018 I would be classified as a day trader in the eyes of the IRS. However, in 2017 I made maybe a dozen day trades. Does anyone know if a Mark to Market election can be filed based on trading history from 2018? Unfortunately the CPA's I've called don't have any consultation time available before April 15, hence my question here.

I appreciate your help!

https://greentradertax.com/trader-tax-center/trader-tax-status/section-475-mtm-accounting/
+
https://greentradertax.com/trader-tax-center/trader-tax-status/how-to-qualify/

Kristian_S · Mar 27, 2018

Yup, an extension is a given. As I said, I haven't found a CPA that has time for a consultation before April 15.

I'm familiar with Green's site. Unfortunately there isn't information about whether or not my 2017 trades or 2018 trades are used to qualify me.

tiddlywinks · Mar 27, 2018

Kristian_S said:
Yup, an extension is a given. As I said, I haven't found a CPA that has time for a consultation before April 15.

I'm familiar with Green's site. Unfortunately there isn't information about whether or not my 2017 trades or 2018 trades are used to qualify me.

The year in which the trades occur. For 2017 tax year, that means trades previously settled or remaining open on December 31 2017. That's what MTM is... Mark to Market on December 31. Realized (and unrealized) gains and losses are fully realized for tax purposes.

The same for TTS... you qualify or not each (tax) year.

johnwoods112 · Mar 28, 2018

hello everyone, can someone recommend a good forex broker?

Kristian_S · Mar 28, 2018

tiddlywinks said:
The year in which the trades occur. For 2017 tax year, that means trades previously settled or remaining open on December 31 2017. That's what MTM is... Mark to Market on December 31. Realized (and unrealized) gains and losses are fully realized for tax purposes.

The same for TTS... you qualify or not each (tax) year.

C'mon people - read the question. I understand how M2M works, the question is which trades are looked at to determine whether or not my application that I will be filling will be approved or not - only 2017 or 2018. I'm not asking if I can get M2M for 2017 trades...

sprstpd · Mar 29, 2018

Kristian_S said:
C'mon people - read the question. I understand how M2M works, the question is which trades are looked at to determine whether or not my application that I will be filling will be approved or not - only 2017 or 2018. I'm not asking if I can get M2M for 2017 trades...

Every year you have to qualify for trader tax status, i.e., every trading year's activity has to be enough to qualify. So if you are declaring MTM for 2018, then you would only have to prove your 2018 activity was sufficient.

wrbtrader · Mar 29, 2018

Kristian_S said:
Hi, I'm a relatively new day trader and have been actively trading in 2018. Based on my trading in 2018 I would be classified as a day trader in the eyes of the IRS. However, in 2017 I made maybe a dozen day trades. Does anyone know if a Mark to Market election can be filed based on trading history from 2018? Unfortunately the CPA's I've called don't have any consultation time available before April 15, hence my question here.

I appreciate your help!

For those reading this message post...this is one of the reasons why a trader should be properly prepared to trade and that includes the business side of trading such as tax preparation.

A tax accountant should be decided upon prior to venturing into trading that's very familiar with trader taxation rules. This was one key advice that my old man had given me to prepare to be a trader prior to putting on the first trade.

wrbtrader

Kristian_S · Mar 29, 2018

wrbtrader said:
For those reading this message post...this is one of the reasons why a trader should be properly prepared to trade and that includes the business side of trading such as tax preparation.

A tax accountant should be decided upon prior to venturing into trading that's very familiar with trader taxation rules. This was one key advice that my old man had given me to prepare to be a trader prior to putting on the first trade.

wrbtrader

This has nothing to do with preparation, any person starting day trading will probably have one year without a mark to market election. A year without it isn't a big deal if your metrics are reasonable. If mark to market is a deal breaker then you shouldn't be trading.

Familiarity with mark to market can be gained by simply reading tax law. Once again, for all the people that have failed to read my posts and have simply glossed over them - this has to do with the basis for election, not how mark to market works.

Great job wrbtrader, maybe your old man should have bought you a book or two growing up to improve your comprehension of the English language.