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E-Mail: info@TraderTaxCoach.net

Options

Stocks, options, and ETFs are taxed at as capital gains and capital losses. Short term capital gains (where most traders would be classified) are taxed at current income tax rates. Capital losses can be used to offset capital gains only and you cannot carry back capital losses. You are limited to $3,000 deduction on capital losses. Any excess loss gets carried forward to the next tax year. 



Coach says, "If you are an options trader, you should not hesitate to elect Section 475 Mark to Market accounting for your trading business. Your gains will be taxed the exact same (current income tax levels) but if you incur losses, you are not restricted to the $3,000 capital loss rule. You are able to carry your losses back for 2 years and forward up to 20 years. The losses can offset ANY TYPE of income, not just capital gains!" 

For more information on Mark to Market click here.
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