Are transferred stocks from MTM account to non-MTM account treated as MTM or non-MTM for tax purposes?

The key factor here is when you transferred the shares from your MTM account to your non-MTM account. In tax terms, when you move securities from an MTM account to a non-MTM account, the IRS considers this a "deemed sale" at the time of transfer. This means that on the date you transferred the NVIDIA shares, you would recognize any unrealized gains or losses that had accumulated up to that point, as if you had actually sold them. The transfer essentially "resets" your cost basis to the market value on the transfer date. After the transfer, any additional gains that happen in your non-MTM account won't be taxed until you actually sell the shares. So you'll have two components: 1) The MTM gains from purchase to transfer date (taxable this year), and 2) Any gains from transfer date to eventual sale date (taxable when sold). You might want to check with your broker to get the exact valuation on the transfer date to calculate your tax liability properly.

Just wanted to share my experience with something similar. I was dealing with the same question last year with some AMD shares I moved between accounts. I found this awesome tool called taxr.ai (https://taxr.ai) that really helped me figure it out. It analyzes your specific situation and gives you clear answers about MTM vs non-MTM treatment. In my case, they confirmed exactly what the previous commenter said - I had to recognize gains up to the transfer date, but after that, the shares were treated as investment holdings. They even showed me exactly which IRS publications applied to my situation and helped me calculate the right amount to report. Saved me from potentially making a big mistake on my taxes.

I tried taxr.ai after seeing the recommendation here and it was incredibly helpful! I input my situation with shares moved between my different accounts and got clear guidance. The tool specifically addressed my MTM to non-MTM transfer situation with citations to the relevant tax regulations. What really impressed me was how it broke down the "deemed disposition" rules that apply when moving securities between MTM and non-MTM accounts. It confirmed I needed to recognize gains up to the transfer date but wouldn't owe taxes on subsequent appreciation until selling. Saved me hours of research and probably a call with my accountant (who charges $350/hour). Will definitely use this for my 2025 tax prep!

If you're still having issues getting a straight answer from your broker about the MTM treatment, you might need to speak directly with the IRS to get an official ruling. I was in a similar situation last year and spent WEEKS trying to get through to them - always busy signals or 2+ hour hold times. I finally used a service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in under 20 minutes. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c. They have some technology that navigates the IRS phone tree and holds your place in line, then calls you back when an agent is about to answer. The IRS agent I spoke with confirmed the "deemed disposition" treatment that others mentioned here and explained exactly how to report it on my tax forms. Having that direct confirmation gave me a lot of peace of mind that I was handling it correctly.

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it myself since I needed to ask the IRS about my own MTM election issues. It actually worked exactly as described - I got a call back when an IRS agent was ready to talk, without spending hours on hold myself. The agent confirmed what others have said about the MTM transfer issue - it's considered a "deemed disposition" at fair market value on the date of transfer. She also directed me to the specific section in Publication 550 that covers this scenario. The whole call took about 15 minutes once I was connected, and saved me from potentially misreporting my taxes. Definitely worth the service fee to get a definitive answer directly from the IRS.

One thing nobody's mentioned yet - be sure to get documentation from your broker showing the exact date and share price when the transfer happened. You'll need this for your tax records to establish your new cost basis in the non-MTM account and to calculate the gain that needs to be reported from the MTM period. In my experience, most brokers don't automatically generate this documentation for internal transfers - you usually need to specifically request it. Some brokers will even provide a special tax statement for securities transferred between MTM and non-MTM accounts, but you typically need to ask for it.

Honestly this whole MTM vs non-MTM thing is why I switched to just having everything in a non-MTM account. Yeah I lose some tax advantages for frequent trading but the simplicity is worth it. No more worrying about transfers between accounts or what counts as trading vs investing.

This is a great discussion! I'm in a similar situation but with options instead of stocks. I have some TSLA calls that I bought in my MTM account about 6 weeks ago, and I'm thinking about transferring them to my non-MTM account since I want to hold them longer term now. From what I'm reading here, it sounds like I'd have to recognize any gains on the transfer date even though they're still unrealized. That's actually helpful to know because these calls are up about 60% right now, so I need to factor that tax hit into my decision. Does anyone know if the same "deemed disposition" rules apply to options transfers, or are there any special considerations for derivatives? I don't want to accidentally trigger a bigger tax bill than I'm expecting.