Robinhood daytrader owes 800K to IRS on a profit of 45K

[guru]

Trader tax status and section 475 elections are not exactly the same thing. I said you can retroactively claim trader tax status. I agree that you can't do that for section 475 election. I just sent an email to my tax accountant to kill himself...are you available to do my taxes?

OK, so the discussion is about the inability to claim mark-to-market losses retroactively.
I wrote "It’s too late, you can’t claim it for past years."
while you responded:
"you can retroactively declare yourself...based on what my tax accountant said to me..."

Different topic, no biggie, but if your accountant would give you a response unrelated to the topic at hand then yeah, he should kill himself

 

[guowei58]

OK, so the discussion is about the inability to claim mark-to-market losses retroactively.
I wrote "It’s too late, you can’t claim it for past years."
while you responded:
"you can retroactively declare yourself...based on what my tax accountant said to me..."

Different topic, no biggie, but if your accountant would give you a response unrelated to the topic at hand then yeah, he should kill himself

i see what you did there lmao. In my tax accountant's defense, here's the actual exchange:

Fan27: "perhaps he can claim trader tax status"
you: "It’s too late, you can’t claim it for past years"
me: "you can retroactively declare yourself...based on what my tax accountant said to me..."

no biggie...

here's my tax accountant's response: "it seems like he didn't understand the difference between trader tax status and selection 475 election. it's complicated i know."

 

[guru]

i see what you did there lmao. In my tax accountant's defense, here's the actual exchange:

Fan27: "perhaps he can claim trader tax status"
you: "It’s too late, you can’t claim it for past years"
me: "you can retroactively declare yourself...based on what my tax accountant said to me..."

no biggie...

here's my tax accountant's response: "it seems like he didn't understand the difference between trader tax status and selection 475 election. it's complicated i know."

Since TTS wouldn't do anything for his problem (deducting losses) then claiming it is irrelevant. But I have no problems with you utilizing your tax accountant. I used to fire accountants and do their work because I wasn't happy with them. Obviously you are.

 

[guowei58]

Since TTS wouldn't do anything for his problem (deducting losses) then claiming it is irrelevant. But I have no problems with you utilizing your tax accountant. I used to fire accountants and do their work because I wasn't happy with them. Obviously you are.

you are the GURU afterall! i expect nothing less. good for you.

 

[newwurldmn]

What’s the difference between trader tax status and section 475? I thought they meant the same thing

 

[guowei58]

What’s the difference between trader tax status and section 475? I thought they meant the same thing

trader tax status: you can deduct trading expenses (no limitation on deductions) and form a company to unlock employee benefit deductions. you can do this retroactively. TTS allows you to claim section 475.

section 475: allows you to MTM gains/losses (recognize them as ordinary income/loss), avoid wash sale rule and carry forward losses. You need to claim this separately. Most times you claim TTS and section 475 together, but you don't have to. you have to claim this before April 15th.

 

[newwurldmn]

trader tax status: you can deduct trading expenses (no limitation on deductions) and form a company to unlock employee benefit deductions. you can do this retroactively. TTS allows you to claim section 475.

section 475: allows you to MTM gains/losses (recognize them as ordinary income/loss), avoid wash sale rule and carry forward losses. You need to claim this separately. Most times you claim TTS and section 475 together, but you don't have to. you have to claim this before April 15th.

Thank you for the explanation . This year the deadline is may 17

 

[guru]

There may also be downsides to electing mark-to-market accounting. For example if you won’t have losses and don’t want to be taxed on long-term gains immediately. Or when you’re carrying past losses forward and want to continue using them to offset future gains.

 

[newwurldmn]

There may also be downsides to electing mark-to-market accounting. For example if you won’t have losses and don’t want to be taxed on long-term gains immediately. Or when you’re carrying past losses forward and want to continue using them to offset future gains.

you can't carry past losses forward until they are extinguished?

you can cordon of certain positions from the marked to market treatment. For example, if you are long some stock for the long term, you can still treat that as a long term, but i am not sure of the mechanics of that.

 

[guowei58]

you can't carry past losses forward until they are extinguished?

you can cordon of certain positions from the marked to market treatment. For example, if you are long some stock for the long term, you can still treat that as a long term, but i am not sure of the mechanics of that.

Yes, you can select which positions you want MTM treatment, and which you don't. It's actually a very flexible approach.