Hi Mike and thanks for your response. All my words are about Mark-to Mark Day Trader. I want to start day trading 1/1/2024 as individual. On the top of the 3115 asks: Tax year of change begins, for me it is 1/1/2024 but I am not sure if I want to be as day trader for 2025, 2026 so what would be for Tax year of change ends??
I thought you wanted the Mark-to-Market election for 2024 which must be made with a timely filed 2023 1040 or extension for it. There is no election/3115 to be just a day trader. Rather you are a day trader if you meet at least most of the criteria below. A day trader does not have to make the M-T-M election. If not, then trades will be capital gain or loss and subject to the wash sale rules. So you really can't file 475(f) Mark-to-Market election/3115 until the tax year preceding the tax year you want it to go into effect and also assuming you'll qualify as a trader for that year.
You must seek to profit from daily market movements in the prices of securities and not from dividends, interest, or capital appreciation;
Your activity must be substantial; and
You must carry on the activity with continuity and regularity.
The following facts and circumstances should be considered in determining if your activity is a securities trading business:
Typical holding periods for securities bought and sold;
The frequency and dollar amount of your trades during the year;
The extent to which you pursue the activity to produce income for a livelihood; and
The amount of time you devote to the activity.
If the nature of your trading activities doesn't qualify as a business, you're considered an investor and not a trader. It doesn't matter whether you call yourself a trader or a day trader, you're an investor.
in one court case a taxpayer was deemed a trader only doing 720 trades a year but he was consistent in how he went about it. Generally, tax pros recommend a minimum of 1000 trades a year.
As a trader your trading expenses go on schedule C. As an investor, investment expenses are not deductible at least through the end of 2025
as to your other questions, for now, I'll skip them because I'm not sure whether you want the M-T-M
election. Only traders can makle the M-T-M election not investors.
