·        Trader In Securities (TIS)

A Trader in Securities is an IRS term used to describe an individual who is actively engaged in trading stocks, commonly referred to as a day trader. This individual trades on a full or near full time basis, essentially carrying on a trade or business. If you can achieve TIS status, the restrictive tax laws on deducting trading expenses are greatly relaxed, thereby enabling you to reduce your tax bill. Our first goal at Daytradertax.com is to assist the active trader determine their eligibility to become classified as a Trader in Securities, as well as assisting in the timing of TIS elections. In our opinion, every active trader should strive to be classified as a TIS if possible.

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·        Mark to Market Accounting (MMA)

If you achieve Trader In Securities status, you then become eligible for Mark to Market accounting treatment. Mark to Market accounting provides the Trader in Securities even more relaxed tax accounting rules.  An overview of these rules are described in our Welcome Message. Our second goal is to assist the TIS achieve MMA status with the IRS.  They have created very stringent guidelines that must be met to achieve this status, and we can assist you to satisfy these guidelines.

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·        Wash Sale Rules

The Wash Sale rule essentially states that you can not deduct a loss on the sale of a security if you reinstate your position in that same security within a 30 day period. This creates obvious accounting problems and a record keeping nightmare for the active trader.  If you achieve both TIS and MMA status, this rule will not apply to you.

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·        Code Section 481 Adjustment

IRS Code section 481 states that when a change in accounting method is adopted by a taxpayer, the cumulative effect of that change is calculated and taken into account over a four year period. Adopting MMA accounting treatment is treated as a change in accounting method. Depending upon the timing and status of your trading activities when you elect both TIS and MMA, you may be subject to code section 481. This complicated calculation, if applicable, needs to be completed on your tax filings, and is a service we provide for you.