The IRS's three conditions
Profit from daily moves, substantial activity, continuity and regularity: all three, weighed on four facts.
Topic no. 429, in its words
"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 facts weighed: typical holding periods; the frequency and dollar amount of your trades; the extent to which you pursue the activity to produce income for a livelihood; and the time you devote (IRS Topic no. 429, reviewed 24 September 2026).
The benchmarks, and the cases behind them
Numbers advisers use; the law names none.
| Benchmark | Where it comes from |
|---|---|
| 720+ trades a year | Poppe v. Commissioner, T.C. Memo. 2015-205; each opening and closing trade counted |
| Trading on 75% of market days | About four days a week, as Green Trader Tax sets its rule |
| Average hold of 31 days or less | Endicott v. Commissioner, T.C. Memo. 2013-199 |
Source
The benchmarks as Robert A. Green, CPA, of Green Trader Tax presents them in a 2021 webinar for Interactive Brokers (read 25 October 2026). They are guideposts for judgement: courts have denied trader status to people above some of them and granted it on the whole picture.
The section 475(f) election deadline
By the original due date of the prior year's return, without extensions; late elections generally aren't allowed.
| Mark-to-market for | Elect by |
|---|---|
| Tax year 2027 | Thu 15 Apr 2027 |
| Tax year 2028 | Tue 18 Apr 2028 |
What the election changes
With trader status and a timely election, gains and losses on your trading securities are ordinary, reported on Form 4797, and the wash sale rules and the capital loss limits don't apply to them; securities held for investment stay outside it and must be identified the day you buy them (IRS Topic no. 429). Losses you can't deduct under the wash sale rule today are what the election removes. Not tax advice: the election is hard to undo.