since MTM won't be effective until the year 2022 all trades in 2021 are capital in nature and subject to the wash sales rules. in 2022 the basis for gain or loss for securities held on 12/31/2021 is their tax basis.
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Purchased stock ABC for $100 in 2018 (i.e. anytime before end of 2021).
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Stock ABC closes at $50 at end of 2021, and opens at $50 in 2022. tax basis for gain loss in 2022 is $100
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Elect day-trader status for 2021 tax return due in April 2022. Mark-to-market accounting will be used for 2022 tax return.
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Stock ABC closes at $75 at end of 2022, and opens at $75 in 2023. you have an ordinary loss in 2022 of $25 and your basis for gain loss in 2023 is the year-end value in 2022
make sure you file a timely election with your 2021 return or extension. the election will require paper filing of your return or extension. as of now, the election must be filed on or before 4/15/2022. there is no relief for late elections.
