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Index futures and options on futures should qualify as a 1256 contract. Secondly, all earnings you create from trading is not considered earned income and as such the income is not subject to Social Security and Medicare tax. In addition, because the income you generate is not considered...

Trading the eMinis has some fantastic tax benefits. The first benefit is that eMinis are classified as a IRC 1256 contact. As a 1256 contract the net capital gain or loss from your trading will be divided into 60% long-term and 40% short-term regardless of your actual holding period...

The wash sale rule basically states that if you sell a stock at a loss and buy replacement stock 30-days before, or 30- days after the sale of the same stock, you can’t deduct the loss. This rule does not apply to gains but only to losses. Naturally, the IRS wants to tax all of your gains...

I did experience one issue with a client that went through a resent audit. This particular client was a very active trader (had over a 1000 trades that year alone) and his primary source of income was trading. This is all the client did all day long. He claimed trader status on his tax return...