If you trade full time and even part-time you may be eligible for "trader tax status." This is especially prevalent if you operate your trading business under an entity such as an LLC. The biggest advantage to claiming “trader tax status,” is the ability to elect Mark to Market accounting. MTM accounting allows the trader to treat capital gains and losses as ordinary gains and losses. Filing under “trader tax status” also allows the deducting of our trading business expenses on a Schedule C.
I highly recommend the book The Tax Guide for Traders by Robert Green for anyone who thinks their trading falls under “trader tax status” or who has been trading professionally for some time. Green is the expert when it comes to trader tax laws and there are many tax advantages to your past filings by electing “trading tax status” on this year’s return. Green's website Green Trader Tax has a wealth of information as well.
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