Do I qualify as a trader in securities?

If you are in the business of buying and selling securities for your own account, you may qualify as a "trader in securities" and have the option of making the mark-to-market election.

To qualify, you must meet all of the following conditions:

• You must seek to profit from daily market movements in the prices of securities and not from dividends, interest, or capital appreciation;
• Your activity must be substantial; and
• You must carry on the activity with continuity and regularity.

The following facts and circumstances should be considered in determining if your activity is a securities trading business:

• Typical holding periods for securities bought and sold;
• The frequency and dollar amount of your trades during the year;
• The extent to which you pursue the activity to produce income for a livelihood; and
• The amount of time you devote to the activity.

If the nature of your trading activities doesn't qualify as a trade or business, you're generally considered an investor and not a trader. It doesn't matter whether you call yourself a trader or a day trader, you're an investor for Federal income tax purposes.