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[Music] so if you're an active day trader it's no secret that wash sells they're not that good they suck right so the IRS put this Washoe rule together because essentially what happens is investors do something what's called tax loss harvesting and what happens is is they look to see if they have locked in significant gains for the year and they'll look in their portfolio to see if there's any losers there that they still want to be a part of a long term but what they do is they sell it to bring down their taxable gain which essentially brings down their taxes and after you're in after 1231 they'll turn around and buy that same position again because that because they planned on being along that position you know for the long haul so when you're an active day trader you may buy and sell the same stock of within the same window multiple multiple times a day so like I know in my own impersonal trading that sometimes when a stock or momentum stock is hot I will trade that same stock for a couple weeks or a couple days depending on you know how long that volume is there so the good news is the IRS has established some guidance under tax topic 429 which establishes what an active day trader is for tax purposes so we have some blog content on our website that covers this topic so you can check that out at trader tech CPA calm if you're not considered an active day trader then this video is not for you you want to make sure that your your trading activity rises to the level of an active day trader so that way you can actually take advantage of the mark-to-market election and so the mark-to-market election is awesome because it does a couple things one thing it does is it gets rid of watch sales number one right so nobody likes watch Hills especially when it comes to tax reporting it becomes an absolute nightmare number two is it converts capital gains and capital losses to ordinary income and ordinary losses now why that's important is because if you have a trading here where you have a capital loss let's just say for illustration purposes that loss is ten thousand dollars if you're not a mark to market trader you can deduct three thousand dollars against other sources of income whether that's business whether to w2 whether you're an independent contractor doesn't matter what that income is the IRS says you can deduct three thousand dollars capital losses against other income he would then carry forward $7,000 to a year a future year where either a you had significant capital income sofa in the next year you made $7,000 that would be considered zero because your $7,000 gain would offset your $7,000 loss now if there's no income present no capital income present in the future year then you can...