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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: velociraptor_ who wrote (8894)	2/5/2001 1:11:20 AM
From: maverick61	Read Replies (1) \| Respond to of 37746

Just one note to add on the mark to market election Velo. I think you covered it pretty well - but people should know if they choose this election, they also need to report any gains on stocks held on 12/31 of each year (ie marking them to market) instead of deferring them to the next year. This may not be a problem for most folks who keep fairly liquid positions - but could cause some concern for others. Now, a trader can still have a long term portfolio in which any capital gains on 12/31 don't need to be calculated, but they need to be very careful in following the rules on those stocks. In particular, any long term port should be clearly identified and segrated, ideally in a separate account. From my perspective, the mark to market election has 2 positives and 1 negative. Outside of these, a person can still gain the majority of benefits of qualifying for trader status without the 475 election. The 2 positives are: 1. No $3000 limit on net losses that can be claimed in a year 2. No wash sale rule to worry about The 1 negative is: 1. All stocks (except those clearly and previously identified as part of a separate long term portfolio) need to be marked to market at year end - and all gains recorded in that tax year. Anyone who has not chosen the section 475 election can still file under trader status assuming they meet the criteria and can deduct their business expenses on Schedule C while recording their gains on Schedule D. One obvious benefit of this is the avoidance of any self-employment tax as well as the ability top write off your trader expenses (such as home office, PC, ISP costs, etc.)