I am a Turbotax desktop Home and Business Edition user.
My MTM election was submitted with my 2023 tax return. 3115 Form will be submitted soon on paper. I don't have anything left from last year (tax year 2023) that needs to be handled this year.
Q1:
For the Form 3115 Part IV Section 481(a) Adjustment line 25, will the answer be Yes to me?
I read online and found the following explanation for the line 25. It seems I fit the cut-off case.
Q2:
If the above is "Yes", do I still need to attach the detailed transaction documents with my 2024 tax return?
Q3:
I know TurboTax supports forms 4797 & 8949 (I also have investment activities) for e-file but does not support form 3115.
Does TurboTax support those detailed transaction documents (DTD) for e-file if they are required for my case as well? if not, can I file the 3115 form and the DTD on paper (including Form 8453) and e-file all others?
Online explanation about line 25
A cut-off basis in accounting refers to applying a change in accounting method only to transactions occurring on or after a specified date, rather than retrospectively adjusting transactions that occurred before that date. When you change an accounting method on a cut-off basis, you start applying the new method from a certain point in time and do not adjust the previous periods' transactions to conform to the new method.In the context of Form 3115 and the Mark-to-Market (MTM) accounting method, if you elect to apply the change on a cut-off basis, it means you would apply the MTM method only to transactions occurring from the beginning of the year of change and onwards. Transactions from prior years would remain as they were under the old accounting method.If you answer "Yes" to Line 25, indicating that you are implementing the change in accounting method on a cut-off basis, you will need to attach an explanation as directed. This explanation should detail why you are using a cut-off basis and from which date you are applying the new accounting method.When you select "Yes" for a cut-off basis, the form instructs not to complete Lines 26 through 29, as those lines pertain to calculating and reporting a Section 481(a) adjustment, which reconciles the differences between the old and new accounting method for prior periods. Since a cut-off basis doesn't require this reconciliation, those lines are not applicable.
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As a trader, the MTM (mark-to-market) method of accounting for your trades is one an investor can’t make. Form 3115 Application for Change in Accounting Method is used to make many different kinds of changes, so it’s important to read the instructions carefully. While I can’t give you an answer specific to you, here are responses to your questions with links to the information given:
Q1
Form 3115 Part IV §481(a) Adjustment line 25 would be “yes” if one wanted to change their accounting method to MTM. Instructions for Form 3115 Part IV Line 25 states:
Also, for certain accounting method changes, the applicant must make the change on a cut-off basis or modified cut-off basis. See, for example, Regulations section 1.446-1(e)(2)(ii)(d) (5)(iii). In those cases, there is no section 481(a) adjustment. Under a cut-off basis, only the items arising on or after the beginning of the year of change are accounted for under the new method of accounting. Any items arising before the year of change continue to be accounted for under the applicant's former accounting method.
MTM election requires a cut-off basis. There is no 481(a) adjustment to be made. If line 25 is answered “yes”, an explanation as to why you are implementing the requested change in method of accounting on a cut-off basis must be attached.
Q2
You will attach what the IRS requires, based on your situation. Look to the Form 3115 Instructions for specifics on what the IRS would like you to attach. (see above link)
Q3
You will only be filing Form 3115 once to change your accounting method. Currently, TurboTax doesn’t support Form 3115 for e-filing. Since documents need to be sent with Form 3115, you will send the Form and the documents together. You will not want to separate parts of the application between mailing and e-filing, the IRS is a big place, so you want to keep all the information together to be processed! IRS instructions for Form 3115 filing are found in Form 3115 Instructions p.2 (see above link). I would suggest getting the mail certified, just so you can be sure it got there.
And remember, we have Full Service where we can do your taxes for you in case preparing your taxes is too taxing!
My status:
I only trade stocks, no options, futures, and others.
Section 475(f) Mark to Market election was filed with my 2023 tax return.
The IRS acknowledgment letter was received a few months ago.
I notified my broker about the MTM election. My broker turned off the wash sale switch for one of my brokerage accounts.
Thank you for your answers.
I am self-employed. I have been using Turbotax Home & Business desktop edition for more than 10 years.
This year, there is nothing new except for the addition of daily stock trading.
I tried to get a feeling of how much your full service will cost but your form list missing 4797, and 8949 forms. I couldn't find the Schedule SE as well.
I am interested in your "Live Assisted" service. Will it cover the stock trader's MTM accounting?
TurboTax Full Service includes Schedule SE and Forms 4797 and 8949, but there are certain situations where you will need to provide calculations. If you are interested, when Full Service opens there will be a button on your TurboTax screen that will say "Do My Taxes For Me". Click on that and you'll get an appointment with a Full Service agent where you can discuss your unique tax situation and obtain pricing.
Our Live Assisted service will have you preparing your own tax return, but you have unlimited help and can call or chat with us as many times as you want. A Tax Expert will provide guidance on how and where to enter your numbers into TurboTax, explain tax law and assist with any issues you may have filing.
Since you are a long-time desktop user (thank you for 10+ years!), you will find the online version very different from desktop. In assisted, you will NOT be able to look at the forms before you pay for the product and all entries are done in step-by-step fashion. When you're a desktop user, you pay for the product before any entry into the program. In Assisted you CAN pay before you file, but don't have to. So to see the forms in Assisted, you must pay first. You can always file the return at a later date.
Assisted does cover help with your MTM entries into the program, BUT it is a specific tax situation that some experts may not be well versed in, based on their clientele.
I also wanted to point out that since you're self employed, preparation of tax returns is a business expense. Don't forget to add that to your business expenses!
I appreciate your help.
I know the MTM is not for every CPA/expert. How will you assign an expert to a customer for the Assisted service? Can a customer specifically ask for an expert with MTM experience?
Do I have to use the online version to get the Assisted service?
What is the cost of the online version with self-employed/small business and MTM functions?
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