Do you know what the IRS requires if long-term investments were converted into trading securities to begin the trading business under the mark-to-market election?

You begin the year with investment positions that you convert to trading positions in the same account. An adjustment must be recorded and reported to the IRS. The investment securities are treated as sold at the close of the year before converted to trading securities. The gain is recognized as a Section 481 adjustment. If the amount is greater than $25,000, you are required to prorate the positive Section 481 adjustment over 4 years.