This calculator helps traders compare potential tax outcomes under traditional accounting versus the mark-to-market (MTM) election under Section 475(f) of the Internal Revenue Code.
Your Tax Situation Summary
Filing Status: Single
Other Income: $0
Standard Deduction: Yes ($13,850)
Short-Term Gains/Losses: $0
Long-Term Gains/Losses: $0
Capital Loss Carryover: $0
Trading Business Expenses: $0
Trading Style: Day Trading
Trade Frequency: High (Daily or near-daily)
Wash Sale Issues: No
Tax Comparison
With Traditional Accounting: $0
With Mark-to-Market: $0
Potential Tax Savings: $0
Recommendation
Complete the form to receive a personalized recommendation based on your trading situation.
Explanation
The calculator will provide a detailed explanation of how these calculations were made and what factors were considered in the recommendation.
Important Considerations
Mark-to-Market (MTM) accounting treats all trading gains and losses as ordinary income, eliminating the $3,000 capital loss limitation.
Once you make the MTM election, it can only be revoked with IRS consent.
The MTM election must be made by the original due date (not including extensions) of the tax return for the year before the year you want the election to take effect.
MTM accounting eliminates wash sale rules, which can be beneficial for active traders.
To qualify for trader tax status, you must have substantial, regular, and continuous trading activity with the primary purpose of income or profit.