The IRS has established certain "Special rules that apply if a taxpayer is a trader in securities, in the business of buying and selling securities for his or her own own account."
In order to be considered as a Trader in Securities, the IRS has required that a taxpayer must meet all of the following conditions:
1. The Taxpayer must must seek to profit from daily market movements in the prices of securities and not from dividends, interest, or capital appreciation.
2. The Taxpayer's activity must be substantial.
3. The Taxpayer must carry on the activity with continuity and regularity. How can a taxpayer make a Mark to Market Election? What is the tax treatment of sales of securities in connection to trading business?