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IRC §475(f) Election
MTM treats all open trading positions as if sold on December 31. Gains/losses become ordinary income — not capital gains.
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Eliminates Wash Sales
Under MTM, wash sale rules no longer apply to your trading securities — one of the biggest wins for active traders.
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Unlimited Loss Deduction
The $3,000 capital loss cap disappears under MTM. Large trading losses can fully offset ordinary income.
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Not for Everyone
MTM is best for traders with wash sale issues or big losses. Traders with long-term gains may prefer capital rates.