If you setup yourself up as a "trader", you are right that you don't have to worry the complication of tax.
However, for a part time trader or newbie, if you haven't define and understand the strategy of taxation, I am sure you would get hit with a big tax bill. Because you could not deduct some of your losses. (wash sale).
Let's say I trade a spread 5 days before the expiration:
sell 240 put +1500
buy 230 put -1000
My net is +500 and they expire at the expiration day.
On the expiration day, I repeat the same spread for next month.
sell 240 put +1700
buy 230 put -1000
My net is +700
Again I let them expire.
Would I be tax on (500 + 700 = 1200) or (1500+1700 =3200)???
The tax bill would be very different.
I don't have MTM elected......
However, for a part time trader or newbie, if you haven't define and understand the strategy of taxation, I am sure you would get hit with a big tax bill. Because you could not deduct some of your losses. (wash sale).
Let's say I trade a spread 5 days before the expiration:
sell 240 put +1500
buy 230 put -1000
My net is +500 and they expire at the expiration day.
On the expiration day, I repeat the same spread for next month.
sell 240 put +1700
buy 230 put -1000
My net is +700
Again I let them expire.
Would I be tax on (500 + 700 = 1200) or (1500+1700 =3200)???
The tax bill would be very different.
I don't have MTM elected......