Day Trading taxes

[Troy09]

Hey George,

Question on Form 4797 for MTM.  I made the election last year, and am trying to fill out this form.

I used multiple brokers, and thus have multiple 1099s.  When filling out #10 of Part II, do I sum them all up and put on 1 line, or do I fill out 1 line per broker 1099?  I haven't been able to find any information for this.

Thanks in advance to all!

[GeorgeM777]

Yes, put the gross amounts from all of your accounts on line 10, Part II of Form 4797.  There is no need to prepare separate Forms 4797 for each account.   You probably have the option to combine all of your account activities into one attached statement (as per IRS instructions, the statement should follow the same format as line 10, showing the details of each transaction, and further, the statement should separately show and identify securities or commodities held and marked to market at the end of the year), or you could have one statement for each account.  

Given that Form 4797, line 10 will reflect the totals from all accounts, if you decide to have separate statements for each account, there is probably no need to also include a statement showing the totals from all brokerage accounts as that would be redundant given that the totals from all accounts have already been entered on Form 4797.  

@Troy09 

[Troy09]

Thanks for the info @GeorgeM777 

I wasn't referring to filling out multiple Form 4797s for each brokerage account, but meant multiple rows on line 10 of the single form.  So,  were you saying "yes, fill out a single row using a total of all the accounts"?

Also, given that I'd be putting in a total amount, how do you fill out the two date fields (10b and 10c / Date acquired & Date Sold)?  Do you range it as the full year, the earliest and latest trade for the year, or something else?

Anyone know if I need TurboTax Premier, or can Deluxe suffice?  [Edit] just went ahead and did Deluxe.

The more I fill this out the more I want someone to help review it.  Is this something TurboTax Live could help out with, or should I look for outside help?

Thanks again in advance!

[GeorgeM777]

Yes, your line 10 amounts can all be included on one line in that section.  The IRS instructions for line 10 of Form 4797 contemplate that line 10 can include transactions of the type you effected as a Trader, but also gain or loss from certain preferred stock, gain or loss from small business investment company stock, and loss from Section 1244 (Small Business) stock.  Thus, line 10 has multiple lines in anticipation that a taxpayer may have more than one type of investment to report on line 10.  

Regarding the date fields--10b and 10c--IRS instructions seem to imply that those fields can remain blank given that the taxpayer will be adding the words "Trader-- see attached" in column 10a.  Moreover, your attached statement will include the date acquired and the date sold information, and therefore, it probably is not necessary to even include the word "various" in columns 10b or 10c, assuming such word can be entered.  

Yes, you can use TurboTax Deluxe; however, and while you may already know this, you will need the CD/download version because you will need to go into Forms mode in order to effect manual entries on Form 4797.  Yes, you can upgrade to Live Help or to TurboTax Full Service.  Below is a link to a TurboTax article that explains the steps to follow when a taxpayer wants to upgrade from TurboTax online to other products/services.

How Do I Upgrade

@Troy09 

[Troy09]

@GeorgeM777 you are invaluable!

Question on Regulated Futures Contracts & Section 1256 Options.  My 1099s don't have a column d - Sales price or a column f - Cost or basis.  I'll go ahead and say that I have a loss here.  Can I just enter that loss in column f - Cost or basis, since without a Sales price Turbo Tax would put that amount as a loss in column g - Gain or Loss?

Also, for the attachments, can/should I just attach all my Broker 1099s as they have an itemized list of all the transactions?  They are long so would be sending novels of pages, but I'll send any and all info to prove I'm not lying about anything, ha.

Thanks in adavance!

[gidnoa]

Hi,

I'm an expat, made MTM election in 2012, and traded actively in 2022 (about 1500 options and etf trades) - do you think Turbo Tax full service has preparers who will be able to produce form 4797 (I won't ask for business deductions as don't want to start the hassle with foreign address etc.)

[fanfare]

Regulated Futures Contracts & Section 1256 Options. 

don't try to put that on Form 8949.

there is a separate section of TurboTax for that.

@Troy09 

[Troy09]

Hey @fanfare 

I’m not, trying to put them on 4797 since I have the MtM election.  I’m asking a billion questions bc I want to make sure it’s right and don’t wanna get audited, ha.

[JFandl]

People who have more complex tax situations, such as MTM traders, have not fared well with TT full service, it is too complicated and most don't understand.

If you read the IRS instructions for 4797 trader, you do not list all your transactions on this form, you enter "Trader - see attached".  Then you send in your transactions in the 4797 column format, using a tool such as excel to properly format your transactions which have to mailed in separately. 

I don't understand why you wouldn't take the business deductions, they are allowed and the foreign addresses are not entered, only totals. I would flag anyone who doesn't take deductions as a red flag of someone inexperienced and requires closer scrutiny.

[gidnoa]

Thanks for the very helpful feedback @JFandl !

I had an opposite view on the business deductions, thinking the IRS will think of this as someone who's not looking to file as trader for the deductions, but your point makes sense.