Special Rules for Traders in Securities Special rules apply if you are a trader in securities in thebusiness five star hotel in Madridof buying and selling securities for your ownaccount. To be engaged in business as a trader in securities, you mustmeet all the following conditions. You must seek to profit from daily market movements in theprices of securities and not from dividends, interest, or capitalappreciation. Athènes hôtelsYour activity must be substantial. You must carry on the activity with continuity andregularity. The following facts and circumstances should be considered indetermining if your activity is a securities trading business. Typical holding periods for securities bought andsold. The frequency and dollar amount of your trades during theyear. The extent to which you pursue the activity to produceincome for a livelihood. The amount of time you devote to the activity. If your trading activities are not a business, you are consideredan investor, and not a trader. It does not matter whether you callyourself a trader or a "day trader." Note. You may be a trader in some securities and have other securitiesyou hold for investment. The special rules discussed here do not applyto the securities held for investment. You must keep detailed recordsto distinguish the securities. The securities held for investment mustbe identified as such in your records on the day you got them (forexample, by holding them in a separate brokerage account). How To Report Transactions from trading activities result in capital gains andlosses and must be reported on Schedule D (Form 1040). Losses fromthese transactions are subject to the limit on capital lossesexplained earlier in this chapter. Mark-to-market election made. If you made the mark-to-market election, you should report allgains and losses from trading as ordinary gains and losses in Part IIof Form 4797, instead of as capital gains and losses on Schedule D. Inthat case, securities held at the end of the year in your business asa trader are marked to market by treating them as if theywere sold (and reacquired) for fair market value on the last businessday of the year. But do not mark to market any securities you held forinvestment. Report sales from those securities on Schedule D, not Form4797. Expenses.Interest expense and other investment expenses that an investorwould deduct on Schedule A (Form 1040) are deducted by a trader onSchedule C (Form 1040), Profit or Loss From Business, ifthe expenses are from the trading business. Commissions and othercosts of acquiring or disposing of securities are not deductible butmust be used to figure gain or loss. The limit on investment interestexpense, which applies to investors, does not apply to interest paidor incurred in a trading business. Self-employment tax. Gains and losses from selling securities as part of a tradingbusiness are not subject to self-employment tax. This is true whetherthe election is made or not. How To Make theMark-to-Market Election To make the mark-to-market election for 2001, you mustfile a statement by April 16, 2001. This statement should be attachedto either your 2000 individual income tax return or a request for anextension of time to file that return. The statement must include thefollowing information. That you are making an election under section 475(f) of theInternal Revenue Code. The first tax year for which the election iseffective. The trade or business for which you are making theelection. If you are not required to file a 2000 income tax return, you makethe election by placing the above statement in your books and recordsno later than March 15, 2001. Attach a copy of the statement to your2001 return. omaha hi lo reglasAfter making the election to change to the mark-to-market method ofaccounting, you must change your method of accounting for securitiesunder Revenue Procedure 99-49. Revenue Procedure 99-49requires you to file Form 3115, Application for Change inAccounting Method. Follow its instructions. Label the Form 3115as filed under "Section 10A of the APPENDIX of Rev. Proc.99-49." Once you make the election, it will apply to 2001 and all later taxyears, unless you get permission from IRS to revoke it. The effect ofmaking the election is described under Mark-to-market electionmade, earlier. For more information on this election, see Revenue Procedure99-17, 1999-1 CB 503.