Entering day trader transactions in ProConnect Tax

This article explains how to input day trader transactions to meet IRS Pub. 550requirements.

Table of contents:

Step 1: Input information for Schedule D, Form 4797

1. Go to Input Return ⮕ Income ⮕ Dispositions (Sch D, etc.)
2. In the grid, enter Description of Property.
3. Enter Date Acquired.
4. Enter Date Sold.
5. Click on Details and enter '1' in the field 1=short term, 2=long term [Override].
6. Check the box Securities trader transaction.

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Step 2: Input information for Schedule D

1. In the grid, enter Sales Price.
   1. If you only have the loss amount, enter it in Cost or Basis and don't enter a Sales Price.
2. Under Details, enter Cost or other basis (do not reduce by depreciation).
   1. If you only have the gain amount, enter it in the Sales Price and don't enter a Cost or Basis
3. Under the 6 more tab, select Sale of Asset 4797, 6252.
4. Enter '-1' in the field Depreciation allowed (-1=none, triggers 4797).

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Step 3: A Mark-to-market election for traders must be made

1. Go to Input Return ⮕ Other ⮕ Elections.
2. Select Misc. Elections, on the top right of the input fields column.
3. Scroll to the bottom of the section to the subheading Election to Use Mark-to-Market Method of Accounting
4. Check the box for Mark-to-market election for traders [475(f)].
   1. Enter the trade or business in the field Trade or business for which election is made.

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How to record day trader income as self-employment income without doubling up SE income on Schedule C

1. Go to Input Return ⮕ Taxes ⮕ Other Taxes/Self Employment Tax (Schedule SE).
2. Under the Nonfarm section in the field Net income [Adjust], enter the income amount.
   1. This only affects Schedule SE and allows for calculation of IRA, qualified plan adjustments, and self-employed health insurance.

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