Yes absolutely, I know this firsthand because I never did enough homework on MTM while trading equities (where I think it is a must for stock only traders) and could have gotten a substantial refund on taxes paid during the bubble. As mentioned, everyone's situation is different, and be careful when choosing one over the other because from what I hear it is very difficult to switch back and forth between MTM and non-MTM status.
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Newbie Tax Questions
- Thread starter vanilla2
- Start date
Yes absolutely, I know this firsthand because I never did enough homework on MTM while trading equities (where I think it is a must for stock only traders) and could have gotten a substantial refund on taxes paid during the bubble. As mentioned, everyone's situation is different, and be careful when choosing one over the other because from what I hear it is very difficult to switch back and forth between MTM and non-MTM status.
There is another tip for traders. Pay atleast 90% of due tax before 15th April and file for 4 month automatic extention. You will not pay penalty if 90% tax is paid. This reduces the chances of audit, because most of audits taken out of 15 April guys, and than if possible file for another two months.
Quote from GreenTraderTax:
Good recap.
Commodities and futures gains go on Form 6781, where its broken down 60/40 before auto carrying over to Sch D.
You can reduce the chance of IRS questions if you transfer some gains from Sch D to Sch C to zero it out. That also unlocks 100% depreciation and home office deductions which require income.
Robert Green, CPA
GreenTraderTax.com
Robert,
Do you mean we can report a part of the capital gains (from Form 6781) in Sch C instead of Sch D? Could you please clarify what you mean by transfering some gains from Sch D to Sch C.
Thank you,
Chinook