mark to market

F

Free Thinker

time to decide whether you want to elect mark to market for 2002.the election has to be made by april 15.this will allow you to go back to prior years to get a refund in case you pay big taxes one year and have a loss the next.
only drawback i can see is if you are carrying a capital loss carry forward you cant use it.the answer there seems to be designate two accounts.one mark to market and the other a long term investment account.then use the loss carryforward to offset gains in the investment account.there may be other stradgeys that others can add.
 
Originally posted by Eldredge
Does anyone know exactly how to make this election?
More...


explain clearly in 'the new trader's tax solution' by Ted Tesser.
 
IRS's instruction

http://www.irs.gov/file/display/0,,i1=52&genericId=26945,00.html

My understanding..

1) Must qualify as a trader.

2) If you are, write a statement, fill out Form 3115
You must send the original Form 3115 with you tax return.
You must also send a copy to IRS National Office in Washington (I think). You can find out in Form 3115 Instruction.

Again, please consult a tax professional. I am just reading it off IRS website. Form 3115 is really hard to understand.
 
Let's get it straight, form 3115 is filed when you report using MTM the first year (2002 Tax year) , NOT NOT NOT when you make the election with this years (2001) tax return.
 
does anyone care to guess if the IRS

really enforces the MTM guidelines that some CPA's

are recommending ?

my CPA's interpretation of the rule
is that since I do not keep positions at end of year
I do not need to elect this.

I hope he is not dead wrong on this and that
I do not run into trouble in a few yrs with IRS
 
That's a little like asking, if I don't get caught, then who care's what the rule is.

Any tax strategy has to pass the 'sleep' test. You know what that is , right? :D
 
setharb,
MTM does not only bring you mark to market of open positions, it also transforms capital gains into ordinary income, so you can offset it with expenses and also avoid the 3000$ limit on losses (not that I wish you losses, but if you have some, better not limit the offset).
MTM brings you other things too. So it's not just about open positions.. oh yes, it eliminates wash sales rules (even without opened positions, you may be under the wash sales rules, be careful.. that's what MTM is used for as well).

tntneo
 
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