TurboTax does support reporting transactions under the Section 475 Mark-to-Market (MTM) election, which allows you to report your trades as ordinary income on Form 4797 instead of capital gains on Schedule D. However, there are some things to be aware of:
- Form 4797 Part 2: TurboTax allows you to report MTM transactions in Part 2 of Form 4797, but this may require manual entry or adjustments. Some users have reported challenges with directly entering data into Part 2 without using "Forms Mode" in the desktop version. There is not a place where you can choose to have these
- Broker Downloads: When you download transactions from your broker, TurboTax typically categorizes them for Schedule D by default. To ensure they are reported under Form 4797, you may need to manually adjust the entries or use the interview process to specify that these are MTM transactions.
- Limitations: If you're using the online version of TurboTax, it might not fully support the MTM election. The desktop version, particularly TurboTax Home & Business , is often recommended for traders with this election.
I would strongly recommend using Turbo Tax Home and Business Desktop version to ensure these transactions are properly reported on Form 4797, especially if you are a day trader.
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