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To: Patricia Meaney who wrote (4641)	10/26/2000 1:42:42 PM
From: SMALL FRY	Respond to of 8046

smartmoney.com Mark-to-Market Traders If you qualify as a trader, the IRS has a deal for you. Under normal circumstances, when you sell a stock at a loss, you get to write off that amount. But if you buy the same stock within 30 days, before or after you sell, the IRS considers it a "wash sale" — and you have a tax accounting nightmare to deal with. Fortunately, you can become what’s called a "mark-to-market" trader, meaning that you will automatically become exempt from the wash-sale rule. Here’s how the mark-to-market rules work. On the last trading day of the year, you pretend to sell all your holdings. Even though you still really hold the stocks, you book all the imaginary gains and losses as of that day for tax purposes. You then begin the new year with no unrealized gains or losses, as if you had just bought back all the shares you had pretended to sell. Being a mark-to-market trader has another advantage. Normally, investors can deduct only $3,000 in capital losses in a given year. But mark-to-market traders can deduct an unlimited amount of losses, which is a plus in a really awful market. The downside to being a mark-to-market trader is, you’ll never have any long-term capital gains, but being a trader, you shouldn’t have any anyway. For more information, see IRS Revenue Procedure 99-17 in Internal Revenue Bulletin 99-7, which is available at the IRS Web site. SF