I agree with Joel, but remember. If you have ANY stocks with a very low basis, mart to market will require you to recognize the profit in the year of election. In other words, if you have CMI at $5.00 a share and you elect mark to market because you have a large paper loss in some stocks, you will have a huge gain in CMI even though you did not sell it.
Good luck. I am electing trader status this year for the first time and not selecting mark to market election.
From: Arthur Schwartz <comedynight2000@
To: OptionClub@yahoogro
Sent: Wed, February 3, 2010 6:55:06 PM
Subject: Re: [TheOptionClub.
The $3K loss limit is applied to net losses after capital gains in the years subsequent to the year in which a net capital loss is reported for the first time. Sounds a little confusing but the way it works is that if you have say a $25K loss, in year one it will not take over 8 years to deduct it at 3K per year. It could but here's how it really works.
In year one you take the first 3K, reducing the carryover to 22K. In the second year if you have 15K in capital gains then you take 15+3 or 18K subtracted from your 22K and you carryover 22-18 or 4K. In year three you have say $10K in losses, then you are taxed on only 10-4K or 6K. I posted this just to clarify how that 3K works..It seems to me the trader tax deduction is also valuable for deducting the full cost of subscriptions and seminars and software or hardware while the individual doing trading on the side can only deduct those costs in excess of 2% of the AGI or adjusted gross income...... ...Joel
From: Kenneth Ginsberg <ken_ginsberg@ yahoo.com>
To: OptionClub@yahoogro ups.com
Sent: Wed, February 3, 2010 8:14:00 PM
Subject: Re: [TheOptionClub. com] Trader status
you are correct that MTM is not required and is a seperate election available to "traders". However, to benefit from the "no" $3000 capital loss limitation and the NOL carryback availability [both of which over the last 10 years or so would have been a major reason to elect trader status for lots of folks] the MTM election is what moves the losses/gains from sched D to form 4797 and also supplements the NOL carrybacks available from sched C.
Thanks for clarifying this for the group though, my previous post was not accurate as it was written.
Ken
From: Peter <pnolan_sd@yahoo. com>
To: OptionClub@yahoogro ups.com
Sent: Wed, February 3, 2010 7:09:28 PM
Subject: [TheOptionClub. com] Trader status
Trader status does not require mark to market. Mart to market is an available option to accelerate losses on paper. If you have paper gains, you would not want to elect mark to market, but trader status is still available. The advantage of trader status is that you can deduct valid investing expernses against your investing gains. All of your courses, data feeds, software expenses would be deductable in the year they were incurred. Without trader status, you would be able to deduct these only after 2% of your adjusted wages were exceded.
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