Hello. I am reading up on day trader tax status and mark-to-market accounting. I understand the part where one reports all unrealized gains and losses as if one sold all stock on the last day of the year. Then the following year, the new basis is the price of the stock at the beginning of the year. Please correct me if I am mistaken.
What happens to the basis of open positions held before changing to mark-to-market accounting? For example:
Purchased stock ABC for $100 in 2018 (i.e. anytime before end of 2021).
Stock ABC closes at $50 at end of 2021, and opens at $50 in 2022.
Elect day-trader status for 2021 tax return due in April 2022. Mark-to-market accounting will be used for 2022 tax return.
Stock ABC closes at $75 at end of 2022, and opens at $75 in 2023.
Is the basis of ABC still $100 (original purchase price) or $50 (price at beginning of year) in 2022?
Is the basis of ABC $75 in 2023?
Thank you.
