If in 2005 I had 20k in short term cap losses and didn't file Trader Status and in 2006 I had 20k in short term cap gains can I file Trader Status and write off all the 05 losses against 06 gains?
nope. its not trader status that allows you to carry loses back its mark to market status. if you want mtm treatment from the tax year 2007 you must file the form by april 15th 2007.
wait i was mistaken. when filing your 2005 return you had a carry forward lose of 17k. the 20k you made in 2006 will erase the 17k lose and you'll have 3k of total gains for 2006. i was thinking if somebody had 20k of loses total they couldn't write off more than 3k of total loses in any one year. if you had made no money in 2006 you would have carried the 17k lose forward from 2005 and used 3k loses in 2006 and carried the remaining 14k lose to 2007. one carries the lose forward untill they make enough gains in a year to wipe it out or they exhaust it with 3k writeoffs every year
You have two questions. Yes you CAN retroactively file with trader status, but before doing so discuss that with your own tax advisor, particularly if it means filing an amended tax return. Totally unrealted to that is the question about the capital losses. As to that, as answered above, I agree that yes, usually the $17K carries forward and offsets gains in the following year.
The link below should point you in the right direction...Also that link has a MTM link. http://www.greencompany.com/EducationCenter/GTTRecTraderTaxStatus.shtml
Once you file MTM, your Capital Gains are now treated as Ordinary income. Can you net a Capital Loss carryover with ordinary income?
Absolutely not! Someone who has Trader Status oftentimes should not elect M2M if he has a sizable capital loss carryforward.
The only reason I asked is the above post you made is misleading. He CAN NOT net his Capital Loss carryover against his current gains after filing MTM since his current year's gains are Ordinary income. Am I misreading your post?
Possibly. Retroactively filing with Trader Status does not change capital gains and losses one bit. But electing M2M does do so. The first posting asked about Trader Status, whereas in a following post the M2M method of accounting was mentioned. Confusing perhaps. There's always some people erroneously use these terms interchangably.
This is really boring, can anyone recommend a decent CPA who doesn't charge an arm and a leg? How difficult is it to file Trader Status for a regular Joe Smoe like me, I make several trades a day so qualifying is not a problem (I think)?