Does software support Mark to Market stock trading accounting method against normal income?

jinspin Member Newcomer

I have few questions regarding my tax situation before I start using FreeTaxUSA.

Your software supports self employment sole proprietor correct?

My tax accountant had declared Mark to Market accounting method back in 2004 filing for my stock trades as daytrader.
I want to use Mark to Market accounting method for my tax filings for all subsequent years including 2023.
Does your software ask me if I want to use Mark to Market and support Mark to Market accounting for stock trades against normal income? Does it provide any forms and calculations for it that need to be filled out? Is there any documentation on this if I need help filling out form?

I understand I can just put total stock proceeds, total cost basis, total wash sales and net in specific form correct? I don't have to enter every single trade correct?

Best Answer

  • KristineS
    KristineS FreeTaxUSA Agent
    Answer ✓

    Hi jinspin,

    Thanks for writing in. Yes, FreeTaxUSA handles Mark-to-Market.

    Form 6781 is created based on your entries. The software program will run all necessary and required calculations on the form itself.

    Each Section 1256 contract held at year end is treated as if sold at fair market value on the last business day of tax year. Wash sale rules don’t apply. ​ Gains and losses are taxed 60% long-term and 40% short-term regardless of how long they were held.​

    You may need to enter transactions separately off Form 1099-B or separate/substitute statement. Contracts not reported on a 1099-B are also entered separately.

    To enter your information follow this path:

    INCOME > Uncommon Income > Contracts and Straddles > Section 1256 Contracts and Straddles