Business & farm

As a trader, the MTM (mark-to-market) method of accounting for your trades is one an investor can’t make. Form 3115 Application for Change in Accounting Method is used to make many different kinds of changes, so it’s important to read the instructions carefully. While I can’t give you an answer specific to you, here are responses to your questions with links to the information given:

Q1

Form 3115 Part IV §481(a) Adjustment line 25 would be “yes” if one wanted to change their accounting method to MTM. Instructions for Form 3115  Part IV Line 25 states:

 Also, for certain accounting method changes, the applicant must make the change on a cut-off basis or modified cut-off basis. See, for example, Regulations section 1.446-1(e)(2)(ii)(d) (5)(iii). In those cases, there is no section 481(a) adjustment. Under a cut-off basis, only the items arising on or after the beginning of the year of change are accounted for under the new method of accounting. Any items arising before the year of change continue to be accounted for under the applicant's former accounting method.

MTM election requires a cut-off basis. There is no 481(a) adjustment to be made. If line 25 is answered “yes”, an explanation as to why you are implementing the requested change in method of accounting on a cut-off basis must be attached.

Q2

You will attach what the IRS requires, based on your situation. Look to the Form 3115 Instructions for specifics on what the IRS would like you to attach. (see above link)

Q3

You will only be filing Form 3115 once to change your accounting method. Currently, TurboTax doesn’t support Form 3115 for e-filing. Since documents need to be sent with Form 3115, you will send the Form and the documents together. You will not want to separate parts of the application between mailing and e-filing, the IRS is a big place, so you want to keep all the information together to be processed! IRS instructions for Form 3115 filing are found in Form 3115 Instructions p.2 (see above link). I would suggest getting the mail certified, just so you can be sure it got there.

And remember, we have Full Service where we can do your taxes for you in case preparing your taxes is too taxing!