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Discussion Forum Index --> Tax Questions --> Day Traders
Budrok@Aol.com (talk|edits) said:
| 16 February 2006
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| I have a client who is a day trader all year besides regular income from employment. He comes to me with all these transactions for the year. In the past it was acceptable to just do a schedule "D" with Various Dates bought and Sold and one Cost and One Sold Price giving me my Gain or Lose. Question this year do they have to be individually broke down on the Schedule "D".For and/or E-File vs Mail In. I looked it up in Pub 17, but didn't quite understand the language. Any explanation is appreciated
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Riley2 (talk|edits) said:
| 16 February 2006
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| If you attach the specific trade information for each trade, you can reference that attachment in the Sch D.
If the day trader has made a valid 475(f) election for 2005, all gains and losses would be reported on Form 4797 as ordinary gains and losses.
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Martineo (talk|edits) said:
| 16 February 2006
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| I'm too tired to try to find info about that. A question: I think I read that Schedulle C could be filed for day trader.
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Riley2 (talk|edits) said:
| 16 February 2006
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| A Schedule C can be used to report the operating expenses of someone who is in the trade or business of being a day trader. However, all gains and losses are reported on Sch. D, unless a Sec. 475(f) mark to market election was made by 4/15/05, in which case the gains and losses are reported on Form 4797.
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Martineo (talk|edits) said:
| 17 February 2006
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| And are there any advantages of electing Form 4797?
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Riley2 (talk|edits) said:
| 17 February 2006
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| If you have a valid Sec. 475(f) election, the losses in your trading portfolio are not subject to the $3,000 limit.
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WillyB (talk|edits) said:
| 17 February 2006
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| Also, a loss from a traders business is a business loss. It may generate a NOL. But as Riley2 notes, you must have made a valid Sec. 475(f) election. It is not an election to file 4797.
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