I am an active day traders who traded actively almost everyday for the year 2019-2020 as only method of income.
If I was not required to file a 2019 tax return due to no income for the year 2018-2019, will I still be able to change my accounting type to Mark-to-Market for that year(2019-and forward) if I file the form 3115 with my 2020 tax return(2019-2020)?
I saw this:
“There’s a rule that says a “new taxpayer” (a taxpayer for which no federal income tax return was required for the preceding year) can make the mark-to-market election during the first two months and 15 days of the election year. They make the election by recording it in their books and records rather than by filing an election with the IRS. It appears that this rule was designed for newly formed entities (such as corporations and partnerships). Individuals who start trading after April 15 without forming an entity will apparently have to wait until the following year to make the mark-to-market election.”
I also read that the new taxpayer can just file the form 3115 with the tax return for 2020 and have the made election by recording in their “books and records” which I don’t know how that can be done for traders.
Is this correct or is it too late to change to Mark-to-Market accounting for the year 2019-2020.