Help needed with 475f MTM election statement requirements - unsure what exactly to include and how to file?

This is helpful but I'm still confused. Do I have to specify the exact stocks/securities I trade or just make a general statement like your example? Also, is there any special IRS form I need to use, or do I literally just type up that statement and include it with my 1040?

You don't need to list the specific securities you trade - a general statement like my example is sufficient. The IRS just needs to know you're making the election for securities, commodities, or both. There's no special IRS form for this election. You literally just create the statement with the elements I listed, print it out, and include it as an attachment to your Form 1040. Make sure to reference it on Schedule 1 when reporting your trading business income. Also remember this election is only available if you qualify as a "trader" rather than an "investor" for tax purposes, which has its own set of requirements.

Does it work with standard tax software like TurboTax? I'm planning to file electronically and I'm worried about how to include attachments like this 475f statement.

I'm skeptical of using third-party tools for something this important. How can you be sure the statement it generates meets all IRS requirements? Has your election been accepted without any issues?

Yes, it works perfectly with tax software. You just upload the generated statement as an attachment when filing electronically. Most tax software has a section where you can add PDF attachments to your return, so you just save the statement as a PDF and attach it there. I completely understand the skepticism - I felt the same way at first. The statement it generates follows the exact IRS guidelines, and my election was accepted without any issues. The tool actually references IRS publications and revenue procedures, so all the language is compliant. Plus, they have tax professionals who review the requirements regularly to ensure everything stays up to date.

How does this actually work? Do they somehow get priority in the IRS queue or something? Seems too good to be true.

Yeah right. No way this actually works. The IRS is basically unreachable these days. Even if they do get through, how do they transfer the call to you without dropping it? The IRS phone system is notoriously terrible.

They don't get priority in the queue. What they do is use an automated system that waits on hold so you don't have to. When an IRS agent finally answers, you get a call and are connected with the agent who's on the line. It's basically like having someone else wait on hold for you. The call transfer actually works really smoothly. When the IRS agent answers, there's a brief automated message explaining that you're being connected, then you're on with the agent. I was surprised too, but it worked without any issues. I got connected to a Specialty Tax Unit agent who knew about 475(f) elections and answered all my questions in detail.

That's a really good point! Can you clarify something though - if I'm making the election for the first time this year (for tax year 2024), do I still have until April 15, 2025 to submit the statement? Or is there an earlier deadline I should know about?

If you're making the election for tax year 2024, the election statement must be filed by the original due date (not including extensions) of your 2023 tax return. So that means you needed to file it by April 15, 2024 for it to be effective for 2024. If you're a new trader who started trading in 2024, there's a different rule - you can make the election within 2 months and 15 days after the beginning of your tax year. But for most people looking ahead to next year, you'd need to file the election by April 15, 2025 for it to be effective for 2025.

The 475(f) election only applies to your taxable accounts. Any trading in retirement accounts like a Roth IRA or traditional IRA is completely unaffected by this election since those accounts already have their own tax treatment.

This is such a crucial point that I wish I had known earlier! I made the 475(f) election last year without fully understanding the trader vs investor distinction, and it caused me some headaches during my tax prep. The IRS really does scrutinize this - they want to see that you're genuinely conducting a trade or business, not just frequently buying and selling investments. One thing I learned is that keeping detailed records of your trading plan, time spent on trading activities, and market research is really important. The IRS looks at factors like whether you have an office space dedicated to trading, how much time you spend on trading versus other activities, and whether you're trying to profit from short-term price movements rather than long-term growth. Thanks for bringing this up - it's definitely something everyone considering the election should research thoroughly before filing!

This is incredibly helpful advice, especially about the irrevocable nature of the election! I had no idea it was so permanent. Quick question - when you mention marking positions to market value at year-end, does this apply to all securities or just the ones you're actively trading? I have some long-term holdings that I don't really consider part of my trading business, but I'm not sure if the election covers everything or if there's a way to separate them. Also, did you run into any issues with your tax software handling the MTM accounting, or did you end up needing to work with a tax professional? I'm trying to figure out if this is something I can manage on my own or if I should budget for professional help.