Trading Acitivity - Sch C and Form 4797

[duanecpa]

Does anyone have any familiarity with a very active trader who reports all trading activity (stock purchases and sales) on Form 4797? Would be interested in specific IRS citations.

Thank you.

[ChEAr$]

Does anyone have any familiarity with a very active trader who reports all trading activity (stock purchases and sales) on Form 4797? Would be interested in specific IRS citations.

Thank you.

I've never of such, but just perhaps he's treating his activity as a trade/business on schedule c. Is this a prospective new client perchance?

[JohnH]

Sounds like on of those mark-to-market investors.
Options, futures, and all that exotic stuff that can cause big headaches at tax time.
They will pay thousands of dollars in transaction fees, then complain about the tax preparation fee.
I guess it's because there's no adrenalin rush in getting their tax return prepared.

Reminds me of the guy who said he knows a sure-fire way to make a small fortune in options & futures.
1) Start with a large fortune.
2) Begin trading.
3) Stop trading when it becomes a small fortune.

[Burke]

Does anyone have any familiarity with a very active trader who reports all trading activity (stock purchases and sales) on Form 4797? Would be interested in specific IRS citations.

Thank you.

See election under IRC 475(e) and Pub 550. Note that the rules are different, require certain treatment, i.e, ord gain/loss -- no special cap gains rates. Not sure what your client is actually doing. Election must be made by certain date. See instructions for 4797.