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I have been doing a lot of day trading the last few years. In 2013 I made a lot of money (tens of thousands in profits), but in 2014 I did poorly and lost tens of thousands.

My CPA said that due to the volume of trades, my trading could be considered a business, and when he filed my 2013 tax return prior to April 15, 2014, he made the mark to market election for me. This is good because without it, I would be limited to a $3000 investment loss deduction per year, and it would take well over a decade before I fully deducted all of my trading losses.

For my 2014 tax return, I filed for an extension. Unfortunately my CPA did not have time to finish it by the Oct 15, 2015 deadline. But his secretary told me that since I'm going to be getting a refund, there won't be any penalties for filing the return after Oct 15, 2015.

He previously told me that he would file my 2014 tax return to claim an NOL for the trading losses, and that would also require amending my 2012 and 2013 tax returns. He said that he would have to file the 2014 return first, and then file the 2012 and 2013 amended returns later. He said he couldn't file them at the same time - he would need to file the amended returns 30-45 days after the 2014 return for some reason.

Is it true that there is a rule that prevents him from filing the 2014 return and the 2012 and 2013 amended returns at the same time? My CPA frequently gets sidetracked by other things and I wouldn't be surprised if he filed the 2014 return and then didn't get around to filing the 2012 and 2013 amended returns until several months later. I wouldn't want to wait that long to get the entire refund. I would also worry if I'd be running up against any deadlines pertaining to amending returns or the NOL.

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Your CPA doesn't need to file anything, so don't worry about him being sidetracked. You are the one doing the filing. Since the amended returns have to be filed on paper, you'll actually go and mail a package to the IRS (each return in a separate envelope).

The reason the CPA suggests to file the amended returns after the current one, is to ensure the NOL is registered in the system before the amended returns are processed. The IRS doesn't have to automatically accept the amended returns, and if there's no NOL on the current year they may just bounce the amended returns back to you.

Keep in mind that since you haven't filed your return by the due date (including extensions), you're now unable to forego the carry-back. I don't know if you discussed this with your CPA, but you're allowed, if you chose so, to not apply the NOL to prior years, and instead to apply it forward for the next 20 years (or until it runs out). Depending on your income pattern, that might have been something you could have considered, but you can only chose this if you file a statement before the due date (with extensions), which is now passed.

  • I'm expecting my CPA to file the amended returns for me since he'll know what the numbers are and I don't. He's the one who's been filing my returns the last few years. Also I didn't know I would forego the option to apply the NOL forward by not filing by Oct 15. Thanks. – void Oct 27 '15 at 15:47
  • @void amended returns are filed on paper. Your CPA may prepare them for you, but you'll have to physically touch the paper (to sign) - and probably mail it yourself (or pay your CPA extra to go to the post office for you). – littleadv Oct 27 '15 at 17:22
  • OK. One more question - if my 2012 return was filed in April 2013, does that mean the latest I could file an amended return for it is by April 2016? – void Oct 27 '15 at 19:00
  • @void yes. You can file a refund claim 3 years after you filed the original return or two years after you paid the tax, the latest – littleadv Oct 28 '15 at 7:28
  • Do you know if there is a deadline for filing Form 3115 to complete the mark-to-market election? My CPA is telling me the deadline was October 15 - if that is true then I can't file for an NOL since it's past October 15 now. – void Nov 10 '15 at 17:37

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