OptionsTaxGuy

The Mark to Market election is an affirmative election - made by the taxpayer on a tax return or extension - to be taxed as a dealer in securities, except without the carrying of securities inventory - stocks that a dealer would make a market in and sell to other traders.

Internal Revenue Code section 475(f) and IRS Rev Proc 2008-52

Yes. The deadline for making the MTM election is the due date of the tax return for the immediately preceding tax year or the extension of that tax return. For example, a trader wishes to make the MTM election for 2023. The deadline for making that election is the original due date of the tax return for the immediately preceding tax year (2022), which would be either March 15, 2023 - for flow-through entities such as a partnership or S corporation - or April 15, 2023 for individuals and other entities. The election is attached either to the tax return itself or the extension.

Theoretically there is, under Reg Sec 301.9100. However, for all intents and purposes, there is no extension for making the mark to market election. The reason for this is that the government does not want a trader to have the benefit of 20/20 hindsight - knowing that the trader has large losses - for the entire year. The election must be made during the first part of the year, by March 15 or April 15 depending on the type of trader.

The due date is either March 15 or April 15 typically. However, the trader could form a new entity soon after those dates, and transfer all trading securities into the newly formed entity and make a MTM election within 2-1/2 months of the formation of the new entity. This would preserve some of the year for MTM trading.

The answer technically is both "Yes" and "No". You may have wash sales added to the basis of stock at the end of the year. In the first MTM year, when the IRC Sec 481(a) adjustment is made, the basis of the shares are adjusted to fair market value at that time. If the FMV is less than the basis of the stock, the wash sale loss is technically "recognized" at that time. However, if the FMV of the stock is greater than the basis of the stock, a gain is recognized but it will be reduced because of the wash sale loss addition to basis.