Cyanideinvestor....Yes, you can deduct all of your losses from the previous year instead of just 3000 under the 475 election which deems you as a trader and treats your trades as a business. There are several stipulations however....You must make a certain number of trades a year. While the IRS does not have a set number, I think if you do 1 trade per day, that qualifies. You must have some type of office that you trade from, whether at home or with a daytrading firm. And most important...you must have made the 475 electionbefore or with the prior year's tax return. Thus, in order to take advantage of this for your 2000 taxes, you must have filled out a form 3011 (I think that's the number) and included a written letter declaring your 475 election with prior to April 2000 with your year 1999 taxes. So, if you have not done so, you can declare the 475 election this year and take advantage of it when you do your year 2001 taxes next year. If you do have more than 3000 in losses for last year and do not have the 475 election, you can only deduct 3000, however, the nice thing is, the remainder of the losses carry forward. If you then make the 475 election this year before April 15 with your taxes, you should then be able to deduct the remainder of your losses next year which you carried forward.
A lot of the deductions are taken off from the schedule C I believe under the 475 election. There are several sources for info...one is the Green Company
greencompany.com
You can also get some back issues of Activer Trader Magazine which had a series of articles about it. April through July 2000 issues think.
activetradermag.com
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