Day traders who qualify as "traders in securities" can elect mark-to-market accounting under Section 475(f), converting capital gains/losses to ordinary income/losses and eliminating the $3,000 capital loss limitation.
A day trader with $80,000 in trading losses: without MTM election, only $3,000 is deductible. With MTM election, the full $80,000 is deductible — saving $26,400 at 33%.
The MTM election must be made by April 15 of the year it applies. New entities can make the election at formation. Consult a tax professional before making this election.
Trading courses, mentorship programs, books, and market education costs are deductible for traders with trader status. Education must maintain or improve skills in your current trading business.
An active day trader paying $4,500 for an options trading mentorship program deducts the full amount — saving $1,485 at 33%.
Books, courses, and seminars on trading strategies, technical analysis, and market structure are all deductible for traders with trader status.
Each cryptocurrency trade, swap, or exchange is a taxable event. Proper structuring — holding periods, loss harvesting, and entity selection — can dramatically reduce crypto tax liability.
A trader with $200,000 in short-term crypto gains who restructures to maximize long-term holds and harvests $60,000 in losses saves $37,000 in taxes.
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Most taxpayers leave the QBI deduction unclaimed — it reduces taxable income by up to 23% starting 2026 under the OBBBA.
HSA contributions offer a triple tax advantage — deductible, tax-free growth, tax-free withdrawals.
Charitable donations of appreciated stock avoid capital gains AND generate a full fair-market-value deduction.
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