Keyword Analysis & Research: 475f income


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Frequently Asked Questions

What is a SEC 475 election?

A Sec. 475 election, on the other hand, converts income and losses to ordinary income and losses, and any opportunity to defer income recognition is eliminated. A Sec. 475 election nevertheless offers several important countervailing benefits. One primary result of making this election is that all losses are characterized as ordinary.

What are the tax benefits of Section 475 trades?

Historically, the chief tax benefit of Section 475 was deducting trading losses without limits. Section 475 trades are exempt from onerous wash sale loss adjustments on securities, which can trigger a tax bill on phantom income at year-end.

Are you eligible for Section 475 for 2019?

If you are a securities trader eligible for trader tax status (TTS), consider making a timely Section 475 election for 2019. Section 475 means you’ll avoid wash sales and the capital loss limitation.

What are Section 475 ordinary losses?

Section 475 trades are exempt from onerous wash sale loss adjustments on securities, which can trigger a tax bill on phantom income at year-end. Section 475 ordinary losses are not capital losses, which means the puny $3,000 capital loss limitation doesn’t apply. Example 1: A sole proprietor TTS trader incurred a trading loss of $30,000 in 2018.

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