ToddL99
Expert Alumni

Investors & landlords

Your situation is complex but increasingly common. You spend enough time investing to consider it a "business" and want to deduct all expenses related to the "business".

 

Unless you made a "Mark-to-market" election, your investment gains and losses can only get reported on Schedule D and Form

8949.

 

 You can, however, deduct direct expenses on Schedule C - only expenses would gone on that Schedule C.

 

See the following excellent discussion from @bwa:

 

With Mark to Market, a Trader treats securities gains and losses as ordinary gains and losses (except for any separate investment securities they may have.)  In effect, your gains are taxed as ordinary gains and your losses are allowed in full in the year they are incurred.  

 

It's complicated to change to Mark to Market as you must also change your accounting method. See the IRS description here:  Topic No. 429 Traders in Securities (Information for Form 1040 or 1040-SR Filers) .  I would never recommend someone doing it without professional help.

For gains and losses in your situation, you would report your stock gains and losses as if you were not a day trader.  In effect, you would enter them the same as anyone else.  You would also need to create a separate schedule C (business) where you would report no income, but would deduct margin interest and any other direct costs you may occur.  Unlike an investor, these would be business expenses, not itemized deductions.

As you're moving into a complex field professional help, at least for the first year, might be in order."

 

There are many other relevant posts on the subject at  I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into...