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Strategies & Market Trends : Income Taxes and Record Keeping ( tax ) -- Ignore unavailable to you. Want to Upgrade?

To: kaz who wrote (1985)	3/15/1999 2:17:00 AM
From: Colin Cody	Read Replies (2) \| Respond to of 5810

Paul, This is my first year as a trader and I'm electing MTM. I take it I do that in schedule C under accounting method. As long as you have your "original filing" 1997 or 1998 federal return in the mail postmarked no later than March 17, 1999 that's all there is to it! Even if you file an incomplete return, or make any number of errors or omissions regarding Trader Status filing or the Mark-to-Market accounting, you will have likely met the easy requirements for a valid election if you sent it out certified mail by the 17th. You then have a few months to go back and fix any noncomplying items on your return -- and if done timely, the IRS will accept your original election. It's all spelled out in the Feb 16, 1999 Rev Procedure 99-17. My earlier question still stands, though. I'm at a loss as to how I can file both Schedules D and C. On page one of my 1040, there would be two separate incomes, one for capital gains, one for business. How do I give the IRS the information it wants while making it clear that the capital gain is my business income? There are no clear rules or procedures set out at this time, which is why you are at a loss as what to do next. Everyone is on their own, so to speak. I file my client's returns so that they get the most benefit with the current filings but also with back-drop positions if the IRS seeks to challenge a particular taxpayer's trader status or election. In other words at this stage it is a very personal decision on how to compile your books and records and what to disclose and and how to arrange all that data on your tax return. If you in fact elect Mark-to-Market, you would not have any capital gains (on those stocks identified as being part of your trader's portfolio). Those items would be treated as "ordinary gains or losses" on your return. Up until recently this was a little "rich mans club." We filed and the IRS never really understood what we were doing. We relied on numerous court cases to uphold our positions. But now things are changing rapidly. After March 17th the rules are going to become much harder to comply with for first-time elections. It will be unlikely that a trader could on his own file an election without his or her attorney or at least a CPA. Even old seasoned players will feel the wrath of the IRS as more rules come down the pipeline. How to best arrange your situation in light of these new rules will be "must reading" in an offering on my website, once the rules are approved, or the temporary proposals become the defacto law. Bottom line: GET THAT RETURN IN THE MAIL "as is" by March 17th. Read the rules on my web page for 1997/1998 filings and you'll be able to perfect a valid election on your own. Colin traderstatus.com