How Does the “Trader Status” Election Impact Loss Deductibility?
Qualifying for "trader status" allows a taxpayer to deduct trading expenses as business expenses. If the Section 475(f) mark-to-market election is also made, losses are treated as ordinary losses, fully deductible against any income, including W-2 wages, without the $3,000 capital loss limitation.
Without the 475(f) election, losses remain capital losses.
