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

To: Spots who wrote (113)	2/20/1998 12:04:00 PM
From: Box-By-The-Riviera™	Respond to of 1383

yes......you can elect long term holdings not to fall under mark to market by using some vehicle such as a letter to yourself return receipt or some such thing to designate those shares exempt from your election.... otherwise, as colin said, in any year you have trader status 475f is for life....no going back. Joel

To: Spots who wrote (113)	2/20/1998 5:28:00 PM
From: Colin Cody	Read Replies (1) \| Respond to of 1383

Spot, Yes this should ALL be for education purposes only. I do it for the fun/knowledge as Trader Status is a niche that interests me professionally. There is a huge gapping VOID of knowledge out there regarding trader Status in the professional community. So it leaves me some room to expand professionally/intellectually in an area I enjoy. . Electing 475(f) is a BRAND NEW feature of the law. I believe it is the first time the IRS Code even acknowledges the occupation of Securities Trader. . There are many technical problems to be addressed by Congress. One is your question about which transactions are 475(f) mark-to-market and which are NOT. . Now if someone just read that Barrons story they might get the wrong impression that all their 1997stock loses would somehow become fully deductible. e.g. "A net trading loss for the year, which will include paper losses on your unsold securities, is much less painful as a business (Sch C) loss..." . This as read by a layman MIGHT be interpreted as saying the the IRS Code Sec 475(f) election says you take all your transactions for 1997 and put 'em on Sch C. THAT IS ABSOLUTELY NOT THE CASE. . The Code says nothing of the kind. Not even CLOSE. Keep in mind, the Barrons author was writing this just after the law was passed, so he didn't have the luxury of thorough research. He was also writing to an audience of THE INVESTING PUBLIC, and not to a bunch of CPAs in a Technical Tax Journal (g) So we need to give him some "poetic license", OK? . For starters generally transactions closed prior to June 8th remain CAPITAL. Secondly those transactions "clearly identified" as having no connection to the business of being a TRADER remain CAPITAL. . There are also special rules that are much to technical to discuss here that I'll call the 30 day rule, the 2-year rule and the 3-year rule. . Then there are further rules (that I'll call the 4-year rules) that SEVERLY LIMIT the recognition of the ORDINARY LOSS during 1997 on those transactions that pass muster per the above limitations. . And finally there might be something else I forgot to mention above! . So that's why I used caps for the word APPLICABLE transactions! CPAs should generally use words like Generally and Applicable rather than ABSOLUTES, like "always" and "every". (g) . Colin