Capital Gains and Losses
Questions and comments about tax rules for buying and selling stocks, mutual funds, real estate and other assets.
Capital Gain Losses and Form 4797
Posted by: equilux, May 19, 2017 02:36AM
Hello,

I have capital gain losses to be carryover to next year. My question is I'm planning to get qualified for trader status to take advantage of mark to market.

1. Can I report my long term investments on Schedule D to carry over the $3k loss.

2. Create a company to qualify for trader status and use M-T-M and use Form 4797.

Thank you for your help!




Re: Capital Gain Losses and Form 4797
Posted by: triad, May 19, 2017 04:50AM
Creating a company will not ensure that you qualify for trader status.

Any losses incurred before the MTM election stay on schedule D.

Re: Capital Gain Losses and Form 4797
Posted by: Snargle, May 19, 2017 03:37PM
Imagine how surprised I was when I learned that gains and losses on "trader" securities are to be reported on Form 4797, when the "mark-to-market" election has been made.

They are reported as ordinary gain and ordinary loss in Part II of Form 4797. They're not "Section 1231" gain and losses, however.

See the item "Traders Who Made a Mark-To-Market Election" in the right-hand column of page 2 of IRS's instructions for Form 4797. Here's a link: [www.irs.gov]

equilux, have you sought relevant advice from experienced professional sources other than this forum? You probably should.



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