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Author: sdsaavedra Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Trader status mark-to-market election Date: 9/18/2013 11:40 PM
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I've been a swing trader for a few years and I'm considering switching to mark-to-market tax status - wash sales have been killing me. I think I understand the ramifications pretty well except if anyone knows an answer to the following I'd appreciate it:

1) I know that a trade of a like security in a tax advantaged retirement account within 30 days of a losing trade in a taxable account may require that I pay taxes on gains in the tax-advantaged account & possibly interest & penalties. Is this still true if I make the MTM election?

2) Do my accumulated short-term capital loss carryovers from previous years disappear when I switch from Schedule D to MTM? If not how do I include them in post-MTM return(s)?

Thanks very much in advance if you can help.

:-)Shawn
PS How do I search this Board to find out if this question has already been asked?
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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 119167 of 121061
Subject: Re: Trader status mark-to-market election Date: 9/19/2013 5:54 AM
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I know that a trade of a like security in a tax advantaged retirement account within 30 days of a losing trade in a taxable account may require that I pay taxes on gains in the tax-advantaged account & possibly interest & penalties.

Well, that's news to me. The situation you describe results in a wash sale and nothing else.

Do my accumulated short-term capital loss carryovers from previous years disappear when I switch from Schedule D to MTM?

No. You continue to use them as before on Schedule D.

Phil
Rule Your Retirement Home Fool

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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 119168 of 121061
Subject: Re: Trader status mark-to-market election Date: 9/19/2013 1:28 PM
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I've been a swing trader for a few years and I'm considering switching to mark-to-market tax status - wash sales have been killing me. I think I understand the ramifications pretty well except if anyone knows an answer to the following I'd appreciate it:

1) I know that a trade of a like security in a tax advantaged retirement account within 30 days of a losing trade in a taxable account may require that I pay taxes on gains in the tax-advantaged account & possibly interest & penalties. Is this still true if I make the MTM election?


Your understanding is wrong about what the wash sale rule does. It doesn't make anything taxable in a tax-deferred account. What is does is disallow (defer) the loss in the taxable account, and it's deferred because you adjust the basis in the reacquired (wash purchase) securities. But if those are in an IRA or other tax-deferred account, the basis doesn't matter.

2) Do my accumulated short-term capital loss carryovers from previous years disappear when I switch from Schedule D to MTM? If not how do I include them in post-MTM return(s)?

No, they don't disappear, but they're still capital loss carryovers. They don't become Schedule C items, or NOL carryovers.

Bill

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