Does Alpaca support 475 Mark-to-Market election reporting for it’s business and/or individual accounts?
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Bumping this up - does anyone have experience filing with 475 MTM election while using Alpaca?
Thanks!
hi Charles, were you able to get Alpaca set-up wash-sale exclusion (475-MTM) reporting for individual account? I’m intersted in the same.
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Any updates on this?
@Dan_Whitnable_Alpaca , do you happen to have any info on this question or know who on the Alpaca team is the right person to consult about it?
@velocity_king_kong @Angelo_Mendonca @Suresh_Venkataswamy
Alpaca does not currently support mark-to-market (MTM) accounting for individual trading accounts, and it does not calculate 1099s using MTM.
You can, of course, elect mark-to-market (MTM) accounting. That is between the trader and the IRS, not Alpaca. The MTM election (under IRC §475(f)) requires filing Form 3115 with the IRS. Alpaca isn’t involved in that process at all.
The only impact an MTM election has is when filing taxes. You will ignore the capital gains portion of the Alpaca 1099b form (you still will need other values such as dividends and interest). Sum all of the years’ trading gains and losses and report those on Form 4797. For positions still open on December 31, pretend you sold them at market value as of the closing price at the end of day for the last trading day of the year. Calculate this ‘phantom’ gain or loss and include it in your Form 4797 totals. This adjusts your cost basis for the next tax year.
Thanks for the response, it is very helpful! On the monthly account statements that Alpaca generates with gains/losses, do those losses factor in wash sales or no? Just wondering because the wash sale rule does not apply when using the MTM election. If the statements enforce the wash sale rules, it implies that the account statement Alpaca generates is no longer useful for MTM accounting, and that the Alpaca API needs to be used directly to compute gains/losses
@velocity_king_kong The Alpaca account statements and any cost basis numbers do not account for wash sales. The single document that calculates wash sales is the end of year 1099b form.