I'm confused about how I would report it. Trading losses are reported on US Form 4797. MA Schedule B for Capital Gains and Losses line 17 says "Loss on the sale, exchange or involuntary conversion of property used in a trade or business and held for one year or less (from U.S. Form 4797)", but this form only allows the short term losses to be applied to interest, dividends, and long-term gains, and the rest must be carried over, and similarly applied in subsequent years. In fact, I see that this is how the aforementioned tax professional did it. On the federal return he reported trading losses on Form 4797, and on the 1040 those losses were reported on the line that says "Other gains or (losses). Attach Form 4797", but for the state return he reported the trading losses on Schedule B, only used them to offset interest and dividends, and reported the rest as carryover to future years. So is this incorrect? Should I be reporting trading gains/losses on Schedule C as business profit/loss?
