Mark to market, reconciling with 1099

[stock777]

I'd like to see what some of you did in reporting mtm stock trades. If you enter a mtm 'sell' on Dec 31, then it throws off the TOTAL SELL that's actually reported on the brokers 1099, overstating that figure.

Can't seem to find an actual example of the best way to handle that issue.

 

[sprstpd]

Quote from stock777:

I'd like to see what some of you did in reporting mtm stock trades. If you enter a mtm 'sell' on Dec 31, then it throws off the TOTAL SELL that's actually reported on the brokers 1099, overstating that figure.

Can't seem to find an actual example of the best way to handle that issue.

You have to include an extra statement sheet explaining why the totals are different. Your mark-to-market form should reference this extra statement.

 

[stock777]

Yes, I did see a refrerence in the IRS instructions saying to break out the mtm trades.

Another question, my interpretation of the IRS code leads me to report stock mtm trades on 4797, and not flow any of that gain to the Sched C. There are many suggestions on the web to somehow move that amount to the Sched C, so that it 'looks' better when reporting expenses there, but I have not been doing that, leaving the gain on 4797, and flowing to 1040 line 14.

Are any of you doing this, or something different?

 

[sprstpd]

Quote from stock777:

Yes, I did see a refrerence in the IRS instructions saying to break out the mtm trades.

Another question, my interpretation of the IRS code leads me to report stock mtm trades on 4797, and not flow any of that gain to the Sched C. There are many suggestions on the web to somehow move that amount to the Sched C, so that it 'looks' better when reporting expenses there, but I have not been doing that, leaving the gain on 4797, and flowing to 1040 line 14.

Are any of you doing this, or something different?

I shift enough profit from Form 4797 to exactly cover the expenses of the business. So I always report $0 as the total income from the business from Schedule C. I have heard that the IRS looks more carefully at returns where businesses show losses. By shifting the income from Form 4797 to Schedule C, you are able to show no loss for your business, and this shift does not change the amount of tax owed. If you do it this way, you should give supporting documentation telling them about the shift (and how it does not change the amount of tax owed).