Reported 3 days ago
Section 1256 contracts, which include certain futures, foreign currency, and non-equity options, are subject to special tax rules under IRS regulations. These contracts are required to use mark-to-market accounting, where gains and losses are reported annually, regardless of whether the positions are closed. A unique feature of Section 1256 contracts is the 60/40 tax treatment, allowing 60% of gains to be taxed at lower long-term rates. Investors need to file Form 6781 to report these contracts, and those with net losses can carry them back to offset previous gains for potential tax refunds.
Source: YAHOO