Wash Sales Suck! Why Active Day Traders Need To Elect Mark-To-Market.

[@BrianRiveraCPA]

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[@tubro007]

The way many people present WS is confusing, everyone seems to imply that Net losses can't be taken. If it's the case, it should be stated clearly that the losses all work out against the gains once the WS window closes. Rather what's happening is that the IRS doesn't want you selling shares at a loss end of year to take a loss on your return, then going back shortly after buying them back just to get tax benefits. The losses taken in the first leg of the trade aren't just lost forever, once the final shares are sold and the WS window closes everything gets netted out. Also, seems WS doesn't matter at all unless done around the end of the year; where upon it's beneficial to have Trader status as then you can elect Mark to Market and take the loss in that year without needing to actually sell the shares or deal with WS rules that come into play if it's around year-end. Am I missing something? TDA examples of WS and there handling kzbin.info/www/bejne/mIe7no1rhc1moLc

[@R130warzone]

3 years later still valuable content.

[@NekolesPerspective2.0]

I started day trading this year and learned quickly about wash sale. My advice to anyone who’s not an expert... study the IRS rules. STAT!!!

[@BrianRiveraCPA]

Absolutely!

[@tedegooday8841]

Hi Brian How to reach out to you?

[@samyazz259]

I believe the 7,000 loss is not carried over to the next year solely. It is carried over to the next year and then 3,000 will be reduced that year so then there is 4,000 left. Then the third year another 3,000 will be deducted. and the 4th year the last 1,000 can be deducted. You can move these loses over year to year for 8 consecutive years with a max of 3,000 being deducted every year as an everyday investor. You can not simply deduct the remaining 7,000 the second year. You need to move it over year to year for 4 years. If I am wrong please advise. Thank you for your video.

[@Anthony-wp1by]

Geez, why in the world do they make life more complicated! Thank you for the video. Liked and subscribed.

[@cosmodiablo1213]

the more complicated they make it, the more they can tax you. taxes on wash sale losses are garbage and should be restricted to december. EVERYONE told me all wash sale losses had to be added to profits. ended up paying $20000 extra because of this

[@davidblacklock]

Very helpful I did the election. Now I am fussing with the 3115. Thanks.

[@semirla]

5:37 you might misunderstood the concept, if you keep track of your investments and kept them in a different platform you still keep the long term status.

[@BrianRiveraCPA]

That is correct - as long as you can specifically "identify" investment positions

[@silkandvelvet]

This guy is dropping gold!

[@Algebra1TopStudent]

As per IRA site, As a trader, you must make the mark-to-market election by the original due date (not including extensions) of the tax return for the year prior to the year for which you intend the election to become effective. ****** that means , we can go back in time and tell the IRS that I was MTM prior year?

[@mloan110]

Does Market to market election apply to OPTION trading too?

[@decisionsciencegaming]

really wish I watched this last year xD

[@tightfoo]

you answered my question here as MTM is not retroactive though that sounds like an amazing idea to utilize an entity as the MTM to take advantage of both.

[@mytrashguypa]

AMAZING CONTENT. You are the CPA every entrepreneur needs

[@rawfit4960]

Man your videos are awesome my guy! Much luv and respect for what you are doing for the community!

[@kevngu7256]

Great info! Btw love your setup . Can you do a video on it.

[@obijuan3004]

This is a big issue as more people are trading from home. This is the first person I have seen that is brave enough to publicly discuss the topic. Good Job!! Even my CPA doesn't want to talk about it. LOL

[@dannyballz1987]

Absolutely I'm in pickle where I closed the year at a loss but because of wash sale I posted a capital gain of 10k and im like crap I gotta pay taxes on this.

[@obijuan3004]

@@dannyballz1987 Yep. The rich and famous don't pay a cent, but you had better pay up on that wash sale cash. I'm in the process of working with a CPA to create an LLC and make the LLC work under the trader tax status. Still working on it.

[@too-da-loo]

The learning curve for trading is huge. I was doing so well until I took my first loss on a position. Then I purchased back in a week later and they added my previous loss to my cost basis. I then was unable to sell without even more loss. What I do not understand is how you can end up with the original loss and a new loss caused by the addition of the wash sale adj. It would have been cheaper for me to just not claim the loss on my taxes. However, lesson learned...

[@BrianRiveraCPA]

Thanks for sharing lessons learned!

[@BenTrades]

thats a good thing why wouldnt u want to take the loss lol

[@Max36300]

Great video. Thank you very much breaking this down in a clear and easily understandable way.

[@HeyYouWhereMyMoneyAt]

Good video bro. I have a question, Since one would meet most of these requirements if they meet the continuity requirement as you explained on your other video, how would one elect mark to market without having the appropriate trading history yet. My question simply is what happens on your first year of trading. I have been trading actively since last March and I have a large wash sale disallowed balance(like 100 times my capital gain). Now that I know this I am going to send that statement, but what do I do with my 2020 tax.

[@FELUNKADUNK]

fantastic content....didnt even think about my long term positions getting hit....

[@katiefranklin6013]

So I day trade options on SPY exclusively. My question is if by the end of the year I am positive overall would the wash sale rule affect me? Or is it only if I’m negative overall?

[@BrianPhillipsRC]

Very nice video! thanks for putting this together!

[@andymiser7710]

Good content! New sub here! I filed my taxes this year do I send the election for mark to market now or does an amended return have me to be filed?

[@JonHo714]

So very helpful, thankful for your simple and easy to understand videos.

[@DannyOvox3]

Your channel has so much good information, thank you.

[@nichen6966]

Thank you for this video. It’s really helpful.

[@50Options]

Thank You, Brian. You are such good help.

[@Super-jk3zt]

Very good video my man! Thank you for the valuable information. The knowledge no one wants but needs.

[@Goldies24]

Thank you. There are also less-obvious drawbacks of making a Sec. 475 MTM election One is that for futures (Sec.1256) traders like myself, you forgo the potential benefit of having gains and losses treated for tax purposes as 60% long-term capital gain or loss and 40% short-term capital gain or loss, to the higher ordinary income tax rate. What would otherwise would be treated as capital gain income is transformed into ordinary income. Given that the top federal capital gain tax rate is currently 20%, whereas the top federal ordinary income tax rate is 39.6%. It puts me in a tight spot since I also trade options where the MTM would benefit. Brian, perhaps look into this & let us know.

[@BrianRiveraCPA]

Check out video on index etf traders

[@leafystreet]

Hey Brian, Im still really struggling to understand the relationship between Wash sale loss disallowed and net loss on the year. lets say you have a net loss of -$1,000 but have $4,000 in disallowed wash sales. do you owe taxes on the 4k or can you just not write off the 1k loss? if you are taxed on that 4k then how would anyone ever learn to day trade? it seems like an impossible things to work around while you're having red years while learning.

[@BrianRiveraCPA]

Sales Proceeds minus cost basis + wash sale disallowed = net gain/loss on year. Wash sale disallowed is informational. Shows your total wash sales on the year; not your wash sale "deferrals".

[@datmeskinkidful]

@@BrianRiveraCPA so when filing taxes do you enter the wash sale disallowed into the section for other sources of income or do you enter the net profit/loss

[@ethanchabert]

Good stuff, thanks for sharing!

[@johnnyk7304]

Thanks Brian Very clear explanation !

[@pennytrader12]

Let’s say if I had 50K loss in 2020 then if I had 50K profit in 2022 , can that 50K loss 2 years prior will take care of 50K profit and no tax on those gains ?

[@Travis0717]

Extremely helpful. Thanks!

[@audomatix]

Hi Brian, I'm terrified. Despite all the materials I find explaining a wash sale I can't really figure out when looking at my breakdown on in trade in their Tax Center what I'm going to be taxed on. I made allot of trades this years before I even learned about the wash rule unfortunately. My concern is that the IRS will want to hit me for gains in stocks that I bought back into and then incurred a loss. I have been around the web the past few days trying to get someone to look at my balance sheet with me and frankly no one will help and people are being mean. I am open to paying for a consultation, but truly all I am looking for at this moment is for someone to look over that statement and give me peace of mind as I remain in the market and continue to trade (although not the way I was before learning about this nasty little piece of tax code). Can you help? It's making it very hard for me to focus with this underlying worry that I might be screwed hanging over my head every day.

[@Bye_All_Means]

If you accumulated thausands in wash sales on the same stock. You need to sell all your shares before December 31st and DO NOT BUY THEM BACK FOR 62 DAYS! BASICALLY, you can not deduct all the losses if you continue to hold those shares into the new tax year. It will depend on tax lots that of how many shares you keep repurchasing and day trading... so if you buy 10 and sell 8 at a loss. Then you rebuy those 8 stocks and sell thosr 8 stocks back at a gain. You did a wash sale, but its okay because as long as you do not repurchase the stocks for 62 days you can write off the loss you had on those 8 stocks you day traded. You also can not buy then in January or Febuary, even if you are in the new tax year. Since now the cost basis (accumilated stacked cost to purchase those shares) is still repurchased.

[@ozguroge]

Were you able to figure out the situation? I am exactly in the same position right now and its kinda chasing away my sleeps:/

[@LostOneTrades]

Anybody come to an answer? I am in the same situation as well...

[@valelin01]

Thanks for all your valuable information!! I just want to know how to send the MTM election statement with my tax return, can it be done electronically? Or do I have to mail it?

[@TheTribaltouch]

OK Great video!! I ended the year in the red and am in need of your services as a cpa

[@marc_aussie]

great video, explained it well, thanks.

[@yojoebananas]

Thanks for the video. Is a single member llc able to elect mtm? Which is the most efficient entity to use otherwise ?

[@verilucis]

Thanks, Brian!

[@mistuhspiduhman]

Hi Brian, This video was so helpful. Now I completely understand mark-to-market. What I don’t understand is this: for example, if I had loss $5k but gained back $2k, and I’m at $3k loss until the year ends, with not knowing about the wash rule sale until now, will I get taxed on the $2k? Or do I have to calculate all of my sales. I made myself a spreadsheet so I have all my trades recorded. Is mark-to-market a good option for me to avoid taxes? I basically did 5-9 trades a day since May.

[@simms142]

Thank you for this

[@retrokidd420]

So if my net gain for the year is positive then all the wash sales I have don’t matter?

[@Derek_1111]

I've been trying to figure this out myself. I've been actively day trading the entire year and had no clue about the wash sale. I'm positive on the year but now am worried that all the wash sales will push me deep into the red since I can't claim them vs the gains... I can't seem to figure out exactly how the wash sale works.

[@tubro007]

That's how I'm understanding it, though seems there are some WS rules at year end that might need to be followed.

[@Lathak85]

Hi Brian thanks for the video with very valuable info. If I have over 10k losses and not elected MTM what are my options? Any tips to elect MTM or TTS now for past trading activities? Thanks

[@jmartinez562]

Solid Video, Thank you!

[@DC-pk5np]

Thank you!

[@giftoffullness8034]

Thanks so much for doing these videos Brian! Does electing M-t-M within entity (Scorp) qualify for the 20% QBI deductions assuming taxable income is below the limits?

[@alm2922]

Whole lotta jargon

[@boashna]

I hope you answer or any body else that knows this answer.. I am under impression that wash sale does not apply to large traders lets say 4million dollars.

[@dedysetiadi2851]

Does opening option trades (selling options) and letting them expire count as trades or do you have to close them in order for them to count as a trade?

[@deladdi8741]

Is there a way to check how much wash sales that I already accrued so far in this year taxes? because, I am still in the whole from trading last 2 years but positive this year. I am not sure if I should elect market to market or not. Thanks

[@Shellown]

I’m now starting and want to set things up correctly. Are you saying that if I make the election now I still won’t be able to use the mark to market status for 2021 because it is for the following year? So Only 2022 would count?

[@maq2000]

love the info!

[@billassim9014]

Great video,as a day trader with s Corp, do you have to liquidate all ur positions at end of year, and start fresh in January thanks,,

[@MrSanbonsakura]

Brian. So if i have 50 000$ loss from prior years and I choose MTM THIS year and made let say 100 000 THIS year I can't deduct fully 50 000 loss next year with MTM ?!!!??? only 3000 ?

[@santembb]

How can I make election for Trader Tax Status"/Sec 475(F) MTM election for new S corporation that is setup in February 2024 for Tax Year 2024, this is new corporation setup in 2024, so 2023 tax return will not be filed and so can't attach and file the election form. please guide.

[@rockwithyou2006]

Or close all the positions on stocks that you day traded that year, on 31st december and don't touch those stocks in the entire month of Jan next year. That also works right, Brian?

[@faisalraj6654]

Hi. Just to clear the confusion. I can continue to deduct $3000 (retail trading), and now because I am entering into Day Trading in 2024 (mark to market accounting), I can also continue to deduct full loss, if it occurs? I am planning to open day trading account under LLC. Can you please advice how this would pan out?

[@christianmclaughlin8656]

Hey Brian great content! Let me see if I got this right I took some hard losses way above 3k in 2020 came across your info about mark to market election but now as you explained it does me no good for 2021 if I have gains. If I am doing good this year , It is best to open llc and elect mark to maket on the LLC and soak up losses on my person year over if I have capital gains only person until it fades.

[@MultiVisualeffects]

awesome video. Thank you.

[@possessingthekingdom8396]

What is the best way to soak up your past losses if you are not an mtm trader but you qualify as a tts

[@davidmcleandamrecordings3673]

Good stuff.. thanks

[@user-zr7nm9ke2h]

good morning, i have an LLC for day trader ,do i need to file for a mark to market accountinh even i have an LlC,and how do i do that,thank you,

[@pleefmsd]

Thanks!

[@FawadSurosh]

Question: Can I elect Mark-To-Market after I filed my Taxes for 2021 ? Since today is still April 13, I have 2 more days to reach to the deadline April 15. I unfortunately filed my 2021 taxes just couple days ago and didn't know about submitting a statement for electing Mark-ToMarket along with my tax file. By the way, this was a wonderful information & explanation. Thank you.

[@robertkimble8385]

Brian, if I have a consultation with the firm now and then elect the 475 status for next year, can I write off the consultation as a trading business expense?

[@peace-1712]

Mark to market would only be beneficial if there is a capital loss held for over a year, correct? If someone takes a loss on a position held less than a year then it would be taxed as ordinary income loss & therefore, wouldn't benefit from a mark to market election?

[@allwedoistwin-Trading]

Thank you sir

[@natashak5070]

Hi Brian - thank you for sharing this, it was very helpful! Would you still pass the test if you receive a w2? Having a full time job and trading on the side?

[@jstratfan]

Just discovered your channel. Very informative, thank you for taking the time to produce these. Re: MtM, do you have to file schedule C to get MtM status? (hope that makes sense).

[@BrianRiveraCPA]

Nope!

[@jessicas6757]

can anyone tell me how to make mark to market election with irs? what form do i need to fill out?

[@pdiallo1029]

Good job brother

[@rahulavasthi]

Hi. I am planning to set up my stock trading LLC in May 2024. Is there a way to make the Mark to Market election in a way that my LLC's 2024 income/losses filed next year are also covered under section 475(f) and not just from 2025?

[@jamesficaro4332]

Question If I sold my 89000 shares at a loss of 4600 and bought only 2000 shares back all in the month of June . Do I lose that lost

[@soshfin6324]

does it only happens if you book a loss? what if u r trading same options but only making profits but the option value is going down as its closer to expiration but u r booking profits only?

[@possessingthekingdom8396]

Is it wise to elect mark to market if you have real estate rentals knowing that the gains for your real estate will be taxed higher under mark to market.

[@ericchon7794]

Hey Brian, I loved the video. I got a question to ask you. Does the benefits of TTS and electing M2M apply to all states, or does it differ from state to state? The reason I ask is because I'm based in New Jersey, and I read in an article that NJ doesn't allow the deduction of section 475 ordinary trading loss.

[@BrianRiveraCPA]

NJ has some particular rules around alternative business calculation deductions. Specific to 475 losses though you get the most bang for your buck at the federal level.

[@ericchon7794]

@@BrianRiveraCPA Thank you for clarifying things for me.

[@brasilsoccer0]

In the $10k example with the MTM why does it have to be deducted from “OTHER” sources of income? Can I deduct it from my only source of income: day trading?

[@Jdvl7188_nJ]

What if I start an llc after deadline day for mark to market election?

[@IkaikaArnado]

Nice info!

[@lucyluo3898]

Hi Brian, thank you for educated us on the wash sale, may I ask you one question? what if my wash sale is negative numbers which means I have a deferred loss on the wash sale, sound like it is a tax advantage to my other income taxes at the end of the year, however, what if the stock going up and I start to make money on this stock and then I sell it, how does it going to effected my taxes at the end of year(assuming my other stocks only have $5000 profit),thank you.

[@23home]

Do wash sales apply to options that expire worthless? What if I sell an option at a loss because it’s expiring that day? Not like I could have just kept holding it...

[@Youngjunbug33]

Can I go back to previous tax years if I qualified for the m t m

[@lowkeybeams5663]

Solid content

[@jjs1194]

Awesome!

[@rickhanson9678]

If I setup an entity (LLC) for my day trading, when and how would I specify that I want my entity to be Mark to Market, yet keep my person stuff regular for long term investments. I understand that if I were to change it for myself on my own social security number it would be when I file my tax returns before April 2022... but since I haven't yet setup the LLC or an EIN for it yet, how would I specify Mark to Market for my LLC when I wouldn't be filing taxes yet on my LLC until 2023? Thanks!

[@ThriftHacker]

Hey Brian great content! If you form an LLC for day trading in 2020 will you automatically qualify for mark-to-market for the tax year 2020?

[@livefreeindustriesllc]

same question as well, thanks!

[@yonchu747]

Brian, it's good to have a green suiter on the interwebs. Great channel, I just subscribed. Brian, can you elect mark to market or do you even need it, if I am trading as the general partner (LLC) in a limited partnership (LLC or S Corp)? Thank you.

[@TonyMontana-ww1em]

Hi Brian. Can you explain further what you meant when you advised that current gains would not offset current losses? So for example, I have losses this year, 2020, and I elected MTM for 2020 that I submitted along with my 2019 filed taxes to the IRS. My only gain would probably my daytime income for 2020. I'm in the red for 2020, am I able to deduct all my losses against my work income ?

[@rockroll7649]

Does the IRS provide feedback when a trader's Form 3115 is accepted or denied? Do they deny applications, or do we assume that it is valid once the form is received by the IRS?

[@RachiOrion]

Hi Brian, I just took day trading as my full-time job from this month and I already flied my tax return for last year. Can I send that 447 as a Amendment of my last year return.

[@likbezpapuasov4888]

Sorry, did not get one thing which i thought i understood when reading MtM docs. I have sent the letter of intent in April last year together with tax return to elect MtM status. Now in April of this year i will complete and send the forms for MtM together with the tax return for passed year. Now question : when preparing taxes can i use MtM accounting for passed year as if MtM was already approved? If not and MtM will only start working for this year income (when tax being filled in April of next year) then what was the purpose of sending letter of intent?

[@ValuableShort]

Is it too late to change this for 2021 ? Could I possibly amend my return and change it?

[@somerealchange]

Excellent!!!! Very good bro. This really helped clarify some things for me and also why I'm, hiring you. Quick Question though because my Sister is getting ready to open an account. How and or where could she elect mark to market from the beginning when setting up her brokerage account.

[@tubro007]

MTM is done in your taxes, not in your account, did you watch the video? He tells you what you need to do to elect it and what needs to be done the following year to complete using f3115.

[@Melissa-ei3nm]

If also a long investor AND active trader status...and long invest in one account and day trade in another account...can you mark to mark ONLY your day trading account(s)? (aka so you can benefit from cap gains rate on long term investments in long account). Thanks!

[@annamaria0714]

Hi Brian, I'm looking to do mark to market election when I file taxes this year and a CPA quoted me $1,500 to prepare this. Does this sound reasonable? Thanks!

[@cindy2960]

So I would have to have separate brokerages to and make one an LLC for Mark-to-Market and the other only under my name?

[@AlejandroGuimoye]

Hey Brian, My CPA is telling me that he can't use the 1099s provided by my brokers if we report my trading activity using the MTM method. Instead he says he would need monthly statement as of 12/31/19 and one from 12/31/20 to compare the value of my portfolio at year-end with a year before ? (this sounds like it would be catered to investors, not day traders) I have day trader status, elected MTM in 2018, and don't keep any positions open as a day trader, so I don't understand why CPA would not be able to use 1099s provided by broker. Any advice is greatly appreciated man, trying to figure out if I need to change CPAs. He does my business taxes and has gotten nice reunds, so I started using him for personal/day trading taxes, but not sure if he knows what he is doing when it comes to day trading taxes. Regardless, thank you so much for putting great content on your channel that is clear, concise and fresh.

[@andreweary8756]

Can you still submit Mark to market election if you have submitted your tax report but the tax year deadline is extended ? If so how ?