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One other red flag, you can't get Sect 1256 (60/40) status at the same time
as M-M Section 475 status. Translated, if you elect Sect. 475 status, then
you forfeit the 60/40 benefit. What I do is trade equities and option in an
entity that claims Sect. 475 status and trade futures and futures options in
a separate entity that uses Sect. 1256.
-----Original Message-----
From: Gary Fritz [mailto:fritz@xxxxxxxx]
Sent: Tuesday, March 19, 2002 12:19 PM
To: omega-list@xxxxxxxxxx
Subject: Re: Maybe off-topic: donwloading transactions
> when filing taxes, I usually just compute the difference bwtween
> jan 1 and Dec 31, adjusting for any deposits, interest or cash
> withdrawals. that amount is then subject to the 60/40% long/short
> gains tax.
Assuming I understand the tax laws right (a big assumption!),
* 60/40 applies only to futures trading.
* Mark-to-market accounting (just reporting difference between 1/1
and 12/31) also applies to futures trading.
* You can use MTM accounting for equities (and probably options) only
if you have filed for "Trader" status -- section 458 or whatever it
is.
I'm no authority, just raising a possible flag. Check with your CPA
before you presume to understand the mysteries of the IRS.
Gary
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