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How To Qualify For Day Trader Status

The IRS buckets everyone by default as an “investor” for tax purposes.

In this video we discuss the criteria that needs to be met in order to qualify as an active day trader in the eyes of the IRS.

This is not an application but a set of facts and circumstances that must be met each year to meet the qualification!

B – Business Expenses

E – Equipment Used in Trading

H – Hours Spent in The Market (4+ per day)

A – Average Holding Period Not To Exceed 31 days

V – Volume of Trades (720+)

E – Extent at which you trade (75% of market days)

If you qualify you get TWO main benefits:

a) Business Expense Treatment and

b) The opportunity not “right” to Section 475 M2M

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Interested in booking a consultation to discuss your situation in detail?

Don’t forget to check out our Day trader Blog Resource Center!

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NOL 5-Year Carryback Relief

***NOTE THIS CARRYBACK RELIEF IS NO LONGER APPLICABLE***

The IRS provided guidance on how taxpayers who want to elect to waive or reduce the new provision requiring taxpayers with net operating losses (NOLs) arising in tax years beginning in 2018, 2019, and 2020 to carry them back five years (Rev. Proc. 2020-24).

The IRS also extended the deadline for filing an application for a tentative carryback adjustment under Sec. 6411 to carry back an NOL that arose in any tax year that began during calendar year 2018 and that ended on or before June 30, 2019.

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