It depends. If you decide before the filing deadline in 2022 to make Section 457 election for securities traders (and adopt a marked-to-market accounting) that election is good for all 2022, and all subsequent years until you formally revoke that election. That means that your losses, if any, for 2022 will be ordinary losses. Gains in 2022 will be ordinary gains. All of this relates to your TTS.
I'm not sure exactly what you mean by "lose the ability to claim this negative balance." The wash sale rule essentially disallows a loss. That loss just gets added to the cost basis of the security that you purchased which triggered the wash sale rule. If you sold that security again in 2021, and realized a loss, (and no further wash sales for that security), then that loss will carryover to 2022. Yes, you can use that loss to offset capital gain income, but only capital gain income and up to $3,000 of ordinary income. In other words, that loss from 2021 retains its character as a capital loss because you had not made the Section 457 election for 2021. Married, filing separately, then the amount you can deduct against ordinary income is $1,500.
Follow-up with additional information if necessary.
@olio1987
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