{"id":71411,"date":"2018-09-10T20:08:03","date_gmt":"2018-09-10T20:08:03","guid":{"rendered":"http:\/\/tradertaxcpa.com\/?p=71411"},"modified":"2023-02-24T11:06:43","modified_gmt":"2023-02-24T16:06:43","slug":"tax-treatment-of-futures-contracts","status":"publish","type":"post","link":"https:\/\/www.tradertaxcpa.com\/index.php\/2018\/09\/10\/tax-treatment-of-futures-contracts\/","title":{"rendered":"Tax Treatment of Futures Contracts"},"content":{"rendered":"<p><strong>Futures Contracts<\/strong> (section 1256 Contracts) are taxed differently than other securities.\u00a0 Regardless of your holding period, Section 1256 contracts are taxed as 60% at long term capital gains rates and 40% at short term capital gains rates.\u00a0 The maximum blended tax rate for futures gains works out to be 26.8% (60% x 20% maximum long term capital gains rate + 40% x 37% maximum short term capital gains rate).\u00a0 This compares very favorable to the maximum short term capital gains rate of 37%.<\/p>\n<p>\u00a0<\/p><!--more-->\n<!--noteaser--><p class=\"wp-block-paragraph\">Securities regarded as Section 1256 investments include:<\/p><ul class=\"wp-block-list\" id=\"block-a24ecb0f-3d8a-456f-a2e2-c656c6a3e2a4\"><li>non-equity options<\/li><li>foreign currency contracts<\/li><li>regulated futures contracts<\/li><li>dealer equity options<\/li><li>dealer securities futures contracts<\/li><li>Section 1256 contract gains and losses are reported on Form 6781 and carried over to Schedule D.<\/li><\/ul><p class=\"wp-block-paragraph\">Losses on Section 1256 contracts are treated as capital losses and subject to the $3000 limitation.&nbsp; However, unlike other capital losses, you can elect to carry back Section 1256 losses up to 3 years!&nbsp; They can be used only against gains on Section 1256 contracts in previous years.<\/p><p class=\"wp-block-paragraph\">Not sure what a capital gain or capital loss is?&nbsp; Not sure your current income tax bracket?&nbsp; Refer to <a href=\"http:\/\/tradertaxcpa.com\/index.php\/2018\/09\/10\/taxableincome\/\">this post<\/a>.<\/p><p class=\"wp-block-paragraph\"><\/p>","protected":false},"excerpt":{"rendered":"<p>Futures Contracts (section 1256 Contracts) are taxed differently than other securities.\u00a0 Regardless of your holding period, Section 1256 contracts are taxed as 60% at long term capital gains rates and 40% at short term capital gains rates.\u00a0 The maximum blended tax rate for futures gains works out to be 26.8% (60% x 20% maximum long [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":71416,"comment_status":"open","ping_status":"open","sticky":true,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_glsr_average":0,"_glsr_ranking":0,"_glsr_reviews":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[52],"tags":[62,61,63],"class_list":["post-71411","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tax-treatment-of-securities","tag-contracts","tag-futures","tag-section-1256"],"jetpack_publicize_connections":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - 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