TC clarifies filing requirements for mark-to-market election

In L.S. Vines, 126 TC 279 (2006), the Tax Court ruled that a taxpayer who lost over $25 million from trading securities could be allowed an extension to take a Section 475(f) election. This election allows a taxpayer to use the mark-to-market (MTM) method, which permits him or her to deduct all trad...

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Bibliographic Details
Published in:The Tax Adviser 2007-02, Vol.38 (2), p.76
Main Authors: Schmelzle, George, Keller, Jr., Carl E
Format: Magazinearticle
Language:English
Subjects:
126 TC 279
Accounting
Capital losses
Law firms
Laws, regulations and rules
Recognition of gain or loss (Taxation)
Securities trading
Tax administration and procedure
Tax court decisions
Tax courts
Tax deductions
Tax elections
Taxation
Taxpayers
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Summary:In L.S. Vines, 126 TC 279 (2006), the Tax Court ruled that a taxpayer who lost over $25 million from trading securities could be allowed an extension to take a Section 475(f) election. This election allows a taxpayer to use the mark-to-market (MTM) method, which permits him or her to deduct all trading losses as ordinary in one tax year. A Section 475(f) election is permitted to taxpayers whose primary business is selling securities. The Tax Court ruled for the taxpayer, noting that Regs Section 301.9100-3(b)(iii) states, if specific facts have changed since the due date for making the election that make the election advantageous to the taxpayer, the IRS will not ordinarily grant relief. Even though the Vines decision was taxpayer-favorable, not all taxpayers will be able to obtain extension relief for late MTM elections.
ISSN:0039-9957