Mark-to-Market Election for Traders
As a trader (including day traders), you report all of your transactions on Form 8949. If you are in the business of buying and selling securities for your own account, you may also file a Federal Schedule C to report any expense items.
There is no election that needs to be made for a Trader reporting sales on the Form 8949. You would report them on the Schedule D and will be subject to the $3,000 capital loss limit. Some traders make what is called a "Mark-To-Market" election in order to deduct the full amount of the loss rather than $3,000 on your return. However, the election cannot be changed in a future year without IRS permission. If the election is made, any gains in a future year are required to be reported as ordinary income not benefiting from the lower capital gains tax rates. Note that this election, if made, is not good until the following tax year.
If you are a trader entering your transactions on the Form 8949, enter them under the Investment Income topic in the Federal Q&A.
If you have or ever do make the Mark-To-Market election, then each transaction is to be reported in Part II of the Federal Form 4797. If you are interested in making the Mark-To-Market election, you should review the IRS Instructions for Schedule D Instructions, on page D-6, under the sections titled Traders in Securities and Mark-To-Market Election for Traders.
As mentioned above, you will need to complete Form 4797 Sale of Business Property and check the appropriate box on the form to report the transaction in Part II of the Form 4797. Please see Notebelow regarding number of transactions supported by TaxAct.
To enter information to be reported on Form 4797 Sale of Business Property: