I am a stock day trader. I understand I have the option of electing
mark-to-market accounting which would eliminate the wash sale rule. What
forms and publications do I need?
If your trading activity is a business, your trading expenses would be
reported on Form
1040, SCHEDULE C, Profit or Loss from Business (Sole Proprietorship)
instead of Form
1040, SCHEDULE A, Itemized Deductions. Your gains or losses, however,
would be reported on Form
1040, SCHEDULE D, Capital Gains and Losses, unless you file an
election to change yourSome forms you might be
looking for method of accounting.
A change in your method of accounting requires the consent of the
Commissioner and can not be revoked without the consent of the Secretary.
You need Form 3115,
Application for Change in Accounting Method, to change your method of
accounting. Revenue Procedure 99-17 states when an election must be made.
Revenue Procedure 99-49 provides procedures for changing your accounting
method.
If your trading activity is a business and you elect to change to the
mark-to-market method of accounting, you would report your gains or losses
on Part II of Form 4797,
Sales of Business Property.
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