Problem for Sole Proprietor Traders
Sole proprietor traders have one limitation. You are only permitted to deduct as much health insurance premiums as you earn from your trading as reported on Schedule C. If your business does not make a profit, there is no deduction. The IRS classifies gains from security trades as unearned income. If a sole proprietor trader makes a profit (net trading gains less schedule C expenses), they still can’t take the health insurance deduction because their business has no earned income.
you don't indicate on your tax return that you are a trader. without the M-T-M election, you report your expenses on Schedule C while your trading activity gets reported on Schedule D
the IRS identifies you as a trader by the business code in box B
