Need some tax advice

help you out.Joe

key words "...thinking of spending some time playing..." the IRS is highly unlikely to accept your position. Full-time, primary source of income is different. Also, if you want to use mark-to-market, you must file a 3115 by April

15th PRIOR to the year you want to change accounting methods.

clarification of a "timely election":

"In general, the mark-to-market election must be made by the due date (not including extensions) of the tax return for the year prior to the year for which the election becomes effective."

I lost a client over this issue (don't shoot the messenger), but I think I was better off without him.

Do you have some personal experience regarding IRS's treatment of people who claim trader status for some activities, but not as their primary occupation? Pub 550 certainly implies that such activity, which includes reporting expenses on Schedule C, is allowed. If IRS is doing something else in practice I'd like to hear about it since I've recommended several people look into trader status.

I know of them denying trader status for someone who did the majority of their trading in January and in the summer, with infrequent trades the rest of the year. As to primary activity, topic 429 does mention this as one of four factors:

Typical holding periods for securities bought and sold. The frequency and dollar amount of your trades during the year. The extent to which you pursue the activity to produce income for a livelihood, and The amount of time you devote to the activity.

Filing the 3115 (a royally ugly form to fill out) is one shoe.

The other shoe is to formally elect for the Schedule D mark to market. It might seem one or the other is sufficient, but both the formal election and the change of accounting method are required.