1256 futures contracts tax related question

[tiddlywinks]

Operative term for the OP being in his situation long term gain for securities that are not approved by IRS for blended capital gains treatment.

A long time ago, I personally had an accountant "F" this up and I was audited. She said she could do it and I took her word for it. Subsequently when I got the dreaded IRS letter I got a few referrals from my futures broker for accountants who knew what the hell they were doing with futures contracts and offsets. On the advice of my new accountant who was really well versed with futures offsets - I simply wrote a check to the IRS for what they were asking for. Point being, I really didn't want the IRS combing through years of tax returns during the course of a contested hearing.

https://greentradertax.com/trading-futures-other-section-1256-contracts-has-tax-advantages/

Completely agree @bone

Too many if/then branches in the tax code for trading, beyond the (misunderstood) "basics" often discussed here in ET, like TTS, MTM election, and deducting a home office.

Consult a trading tax professional!

 

[tiddlywinks]

Turbotax (with their correctness guarantee)

Read the fine print...
it might be they only guarantee an answer of 4 when the equation fed into it is 2+2.

 

[bone]

I have personally used TurboTax many times when all of my trading was entirely within the scope of 1256 approved contracts. Easy Peasy. Personally, I would have a trading tax professional do it if I was offsetting securities which were not 1256-approved as was described in the OP because Turbo Tax is not set up for that.

Completely agree @bone

Too many if/then branches in the tax code for trading, beyond the (misunderstood) "basics" often discussed here in ET, like TTS, MTM election, and deducting a home office.

Consult a trading tax professional!

Read the fine print...
it might be they only guarantee an answer of 4 when the equation fed into it is 2+2.

 

[Trade Theory]

My understanding is the same as Darths. You can offset losses but you gotta be careful as to what you’re offsetting. Do some research on tax straddles and make sure you’re not violating any of those rules which is what screws most people up.

It's been my understanding that 1256 is for futures trades exclusively. I have trader status but file 1256 as I only trade futures. I would ask the question of a trader tax pro like Bob Green.

Index options as well SPX RUT NDX VIX XSP