Join TSC tax columnist Tracy Byrnes and Martin Nissenbaum, national director of personal income-tax planning at Ernst&Young for an hour-long Yahoo! (YHOO) chat on tax planning and e-filing Tuesday, April 4, at 5 p.m. EDT. Register for the Yahoo! Chat at: It's free!

Tax Forum has tallied its 10 most requested questions of the season. Unlike a

David Letterman

list, this one doesn't get funnier as it goes along. But with only 16 days left until April 17, this pseudo-index hopefully will make your crunch time a bit easier.

10. How are QQQs Taxed?


Nasdaq 100

tracking stock

(QQQ) - Get Report

, introduced last year, has been one of the hottest topics we've written about.

When you buy the QQQ, you actually are investing in a unit investment trust that holds shares of the companies in the Nasdaq 100 index. Since these things trade like a mutual fund, the

tax rules are very similar.

9. What Investment-Related Expenses Can I Deduct?

Anything that you pay for and helps you make investment decisions is deductible, so don't forget your


subscription! Remember, these investment-related expenses are deductible only once they exceed 2% of your adjusted gross income.

Read this

story for more details.

For an explanation of the deductibility of brokerage fees in IRAs and taxable accounts, see this

Tax Forum.

8. How Do I Report Option Trades?

Report your option trades on

Schedule D

- Capital Gains and Losses

just like your stock trades. Click

here for some illustrative examples.

Remember, options on broad-based indices, like the

S&P 500

, are subject to the 60/40 rule, which says that 60% of your gains or losses are treated as long-term and the remaining 40% are treated as short-term, regardless of the time held. And that rule applies

regardless of whether your positions are open or closed at year-end.

7. How Do I Report My Short Sales?

When you enter a short sale you borrow a security from a broker and then sell it. Later on you buy the stock back, hopefully at a lower price, and return it to your broker. Only when the short position is closed -- i.e., the stock is delivered back to the broker -- is there a

reportable taxable event.

What happens when your short position is still open at year-end? Read

this for an illustration.

And just because you're short doesn't mean you can duck the wash-sale rule. We covered this in a recent

Tax Forum.

6. Must I Input All My Trades in Schedule D?

If your broker's statement has everything the

Internal Revenue Service

needs (i.e. date purchased, date sold, proceeds and cost) or you've created a similar schedule, then all you have to do is attach it to your tax return.

Check out our story on

Mike Bauer's tax return for the logistics.

5. Can I Mark My Trades to Market?

As a trader, you have the option of marking your trades to market, which means you must value your holdings as though they were sold at fair market value on the last business day of the tax year.

But you needed to make this

election on your 1998 tax return to do so for the 1999 tax year.

If you did, read this

story from our

Taxes for Traders

series for the details on how to indicate the mark-to-market election on your 1999 tax return.

Big note: Traders who use tax preparation software will have to

overrride some numbers to report this election properly.

4. How Do I Report Margin Interest?

Margin interest is a miscellaneous itemized deduction. It's not added to the cost basis of the stock. Read this

Tax Forum for more details.

But traders are entitled to a 100% deduction of their margin trading interest on a

Schedule C

-- Profit or Loss from Business


3. Am I a Trader?

Only you know the truth. Here are guidelines, but nothing is written in stone:

If I asked what you did for a living, what would you say?

Other requirements: You only trade for your own personal account and do your own trading. You take advantage of market swings and hold your securities for a short period of time, around 30 days at most.

Read this

story from our

Taxes for Traders

series for more details and the corresponding case law.

Then check out these Tax Forums that answer such age-old questions as:

Can I have two jobs and be a trader? and

What if my wife has a 'real" job?

If you're still unsure, email trader tax specialist

Ted Tesser and request his free "Trader or Investor?" questionnaire.

2. How Do I Report My Roth Contribution or IRA Rollover?


story will show you exactly how.

But if all you did in 1999 was make a contribution to your Roth IRA, you don't have to report a thing to Uncle Sam. You still should fill out the worksheet on page 6 of the instructions

Form 8606

-- Nondeductible IRAs

to keep track of your

cost basis in your Roth.

1. What the Heck is the Wash Sale?

Here's the lowdown: If you sell a security at a loss, you can't deduct the loss on your tax return as long as you acquire a "substantially identical" security 30 days before or after the sale.

Check out our

mega-piece on this rule for all the gory details.

Then click back to

Mike Bauer's return to see how to report a wash sale on your Schedule D.

Send your questions and comments to, and please include your full name. Tax Forum appears daily through April 17.

TSC Tax Forum aims to provide general tax information. It cannot and does not attempt to provide individual tax advice. All readers are urged to consult with an accountant as needed about their individual circumstances.

TSC Tax Forum aims to provide general tax information. It cannot and does not attempt to provide individual tax advice. All readers are urged to consult with an accountant as needed about their individual circumstances.