Day Trader how to report on taxes

[yeknod]

First time filing for a day trader...

Can someone tell me how to report the day trading transactions?  Sch. D or Sch. C?

I'm using Proseries Basic...   TP has loses of around 50K...

Do i need to make the election for the TP (Mark to Market)  How is that done? Is it to late to make that election for 2019 taxes?

Are the day trader transactions reported on Sch. D then the expenses reported on Sch. C?

Any help would be greatly appreciated...

Thanks in Advance!

[BobKamman]

If the nature of your trading activities doesn't qualify as a business, you're considered an investor and not a trader. It doesn't matter whether you call yourself a trader or a day trader, you're an investor.

I didn't say that, IRS did, here:

https://www.irs.gov/taxtopics/tc429

Generally speaking, people who lose money want to be called traders so they can claim it all in one year, and people who make money want to be called investors so they don't have to pay self-employment tax.  Are you sure you want this client?

[yeknod]

This is a legit client.  Only does day trading

he quit his job and started trading Jan 1st 19

so how should it be reported?

[Just-Lisa-Now-]

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@yeknod wrote:

This is a legit client.  Only does day trading

he quit his job and started trading Jan 1st 19

so how should it be reported?

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Did you read the link that was given?  Is your client an investor or a trader?  

[abctax55]

And if your client truly wants to be a day trader, the election to be treated as such must be made soon to be effective for 2020.  It can't be done retroactively for 2019.

AND, I have NO idea if that's something that can wait until July 15.  IF your client truly wants to be considered a day trader, I would make sure that election is filed by April 15th.

Day traders report the appropriate gains/losses as ordinary income/loss - forced thru F 4797.  Generally, the Form 1099-B activity  needs to be reported on F 8949/Sch D for the IRS to be able to matchy match.   AND when/if money is made it's subject to ordinary income tax rates, NOT capital gain rates. 

Any positions open as of 12.31 have to be *handled* differently (i.e. marked to market).

Costs of running the business - computer costs, OIH if appropriate, internet costs... go on a Sch C.  Which will always show a loss....as in audit red flag.

[rbynaker]

I'm impressed.  You had to try pretty hard to lose money in last year's market!

[BobKamman]

@rbynaker   "You had to try pretty hard to lose money in last year's market!"

But he's made a fortune in the last month. 

Q:  How do you know he's a day trader.

A.   Because he told me.

Q.  If he knows that much about doing his return, why doesn't he just buy TurboTax?

[yeknod]

So, the election was not made for 2019.  Can TP still take the Sch. C expenses?

He did do like 1500 transactions.

Thanks!

[abctax55]

DID you go read the rule/reg/restrictions on being a day trader?  Those answer your question.