What is the implication to a stock trader to make a Mark-to-Market Election under IRC Sec. 475(f)?
When taxpayer's who engage in day trading stocks, make a "Mark-to-market election", it allows these traders (taxpayer's) who make the election to treat security gains and losses as ordinary income. However, all securities on hand at the end of the year are also deemed to be sold at the year-end market value.
Therefore, unrealized gains and losses are recognized.
Clearly, there could be substantial benefits as well as potential problems with this election as both the capital gains and losses are deemed to be considered ordinary income or loss!