Mtm trader status
Section 475(f) of the tax code allows an active securities trader to treat all securities as: generating ordinary income or loss, and if held at year-end, marked to market (treated as sold for fair market value on 12/31 and then repurchased at that value on 1/1). Only someone who qualifies as an active securities trader can elect MTM treatment. Even if you qualify for trader status, you may not offset capital gains with future capital losses unless you elect mark-to-market accounting for your trades. Under mark-to-market accounting A §475 mark-to-market election converting the gains and losses to ordinary income does not change their status for SE purposes. However, since a trader's net earnings are not SE income, he cannot contribute to a retirement plan (e.g