TradeLog MTM™ with Mark to Market Tax Accounting
NOTE: As of July 20, 2008 GTT TradeLog® has officially been renamed TradeLog MTM®.
TradeLog MTM™ was designed to meet the special tax needs of active traders in securities who have elected or are about to elect the mark to market accounting method with the IRS.
The MTM version offers all of the same features as TradeLog™, with the addition of mark to market tax accounting procedures for stocks and options traders.
Why is mark to market the wise choice for traders?
- Trading capital losses are converted to ordinary losses and become exempt from the IRS wash sale rule. MTM traders can deduct their ordinary trading losses against all other types of taxable income without limitation.
- If a MTM trader has negative taxable income (Net Operating Losses), they can carry them back two tax years to get immediate tax relief (hence the term "tax loss insurance").
- MTM Traders in securities are exempt from self-employment taxation and they may segregate investment positions to still get long term capital gains rate benefits.
Mark to market is the best of all worlds
If you are a serious trader, you need mark to market:
Per the new trader tax laws of 1997, IRC Section 475(f), "Traders in Securities" (475(f)(1)) and "Traders in Commodities" (475(f)(2)) may elect mark to market accounting (MTM) by April 15 of the current tax year (not after the year ends).
The main effect of this tax law for traders is the conversion of capital gains and losses into ordinary gains and losses. Therefore, if you lose a lot of money trading, MTM can save your hide.
For more information about the election, see How to elect mark to market.
TradeLog MTM™ makes your change to MTM easy
When you change your accounting method from "cash basis" to "mark to market", the IRS requires that you make a Section 481 Adjustment at the start of the year of change. While this sounds challenging, it's a very simple task with TradeLog MTM™.
The software will take you through a series of simple questions at the beginning of the tax year and at the end of the tax year to determine the appropriate type of accounting method to apply. When you first indicate that you will begin to use the MTM method, TradeLog MTM™ will automatically calculate your Section 481 Adjustment for you and generate a report for you along with your MTM trading Gains & Losses report.
Our User Guide under the subject Mark-to-Market accounting (TradeLog MTM) outlines how to use these reports to complete one line item per broker on your tax return. Both reports get attached to your IRS Form 4797.
As you can see, our software makes your change to the Mark to Market accounting method quick and simple.
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