the IRS has no way to determine from making the election whether or not you actually qualify. if you are audited, likely the only way the IRS could determine that you actually qualify or not and also assuming you go to court over this and lose or decide not to contest the IRS decision. your gains/losses would be treated as capital gains/losses and you would be denied schedule C deductions. besides the taxes there would be penalties and interest.
if you are concerned about this, you should consult a pro for their opinion. but it's only an opinion, the tax courts even SCOTUS if you go that far have the final say.
