How can I make a Mark-to-Market election to my account? (trader status)
The number 475(f) may mean nothing to you, but in the eyes of the IRS, it is a specific tax classification for traders. Although you may believe that you are a trader, the IRS has criteria that classify whether a person is eligible to be defined as a trader and whether or not you qualify for mark-to-market tax election.
Generally speaking, the basis of how much we are taxed from trades is dependent on your holding period (capital gains treatment) and whether you are long or short. In a nutshell, Internal Revenue Code section 475(f) differs from traditional tax treatment because open securities positions are mark-to-market at the end of the year. As a result, your mark-to-market gain or loss is subject to ordinary income tax treatment.
To learn more about Internal Revenue Code section 475(f) or Mark-to-Market Election, please click here
If you have already made the trader status election with the IRS and want to apply it to your tastyworks account, please send our accounts team a signed and dated letter stating that you would like to apply your section 475(f) tax classification to your tastyworks account. Please include your account(s) number in the letter. This letter does require a wet signature (no digital signatures allowed) and must be scanned and sent to our accounts team at firstname.lastname@example.org or faxed to 312-724-7364
The letter should contain the following information, as it is required to process the request: 1) You have made a valid and timely mark-to-market election under section 475(f). 2) Specifically identify the account subject to this election. 3) If the election was made by filing a statement with your return, a copy of that statement should be included with the letter, if possible.
Please note: Mark-to-Market election cannot be retroactively applied. It is effective from the point when it is received and acknowledged by our clearing firm, Apex Clearing, and applied to the account going forward. Furthermore, mark-to-market elections do not carry from brokerage firm to brokerage firm. If you had the election at your previous brokerage, you must make the election again at tastyworks.