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Strategies & Market Trends : IRS, Tax related strategies--Traders -- Ignore unavailable to you. Want to Upgrade?

To: Street Walker who wrote (33)	2/16/1998 3:10:00 PM
From: Box-By-The-Riviera™	Respond to of 1383

Mark to market (once you have trader status) allows you to mark your holdings you still have (have not sold) to the price on the last trading day of the year..... this can be beneficial....for example....if you will owe a lot of tax....but your holdings were suddenly reduced greatly in value on the last day...i.e. you have a paper loss.... you can take this loss against your gains for that year....though you haven't sold the securities yet... then you have a new basis for your holdings (the new price) .... if it now recovers in the new tax year.... any profits will be in the new tax year..... once you have elected mark to market....you MUST always use mark to market in any year you qualify for trader status (which in fact may not be every year)... these losses will be reported on sched c....BTW. If they are huge you will risk an audit....since most likely you will still report income (cap gains) on sched D.... so your sched C will look strange to IRS......HUGE LOSS...but no income.... a red flag. This whole trader status thing and mark to market is extremely tricky...and has risks.... be sure it's worth it tax wise before you do it... kinda like the home office deduction..... don't take it unless you're pretty certain about what the benefits are...since this too is a red flag.... I'm sure Colin can also add light to these topics... Lastly...SI as I have known it....is a pure discussion site....and I think it is a shame when someone blatently starts drumming up business and spamming threads like GREEN CPA.... perhaps, others who agree, will write the SI webmistress regarding his activities. Joel