Repeal Of 60/40 Tax Treatment!!!

I am a new futures trader. Next year will be my first time doing trader taxes. Can someone quantify in a nutshell how significantly the 60/40 rule affects after tax profits?

I understand that it has to do with when you deduct losses, and thus would also be a function of how much your losses are in comparison to profits. Otherwise, it would be very helpful to know just how big a deal this is.

Also, I will be happy to do my part to resist this change. I think drafting a compelling form letter is an excellent idea.
 
I cannot get any text on this Grassley amendent 680 to S. 1054. It was approved unanimously by the senate, however.

I'm gonna email my senator.
 
Quote from vanilla2:

I am a new futures trader. Next year will be my first time doing trader taxes. Can someone quantify in a nutshell how significantly the 60/40 rule affects after tax profits?

I understand that it has to do with when you deduct losses, and thus would also be a function of how much your losses are in comparison to profits. Otherwise, it would be very helpful to know just how big a deal this is.

Also, I will be happy to do my part to resist this change. I think drafting a compelling form letter is an excellent idea.
More...

The way it works is you get a 1099 form from your broker which lists your net profit or loss for the year. You plug that into Form 6781, which makes a calculation that divides the profits/losses 60/40 into long term and short term cap gains, regardless of how long you held the trade. Those numbers go into a separate line on Sched D where you report cap gains. It's highly advantageous because you get the favorable longterm cap gains rate on very short term trades.
 
One problem is the Republican Senator from Illinois, Fitzgerald, is retiring and may not give a damn about this.

Maj. Leader Frist should remember the Hippocratic Oath he took as a doctor"...First, do no harm..." I wish he could explain to me WTF Republicans are doing raising taxes.
 
As I recall the Senate bill also contains a $20 billion slush fund to bail out states that can't live within their budgets. I really appreciate the chance to help out big spending states like NY and California, particularly when I have no say in how they spend my money.
 
So what's the bottom line? Are they trying to push elimination of 1256 through? Do I need to write my rep and senator? If so, this is absolutely ridiculous...they have no idea how many people they are going to affect!

If this is for real, I echo the prior suggestion of posting a form letter...I'd be happy to take a first crack and then the community can ammend it. We can then post links to house/senate email addressess.
 
AAA, thanks very much. That clarifies a lot. Can you give me a ballpark range, for instance, what percent of one's after tax profit this change will represent when all the paperwork is said and done? (assuming they trade 100% futures, and very short term).
 
You must log in or register to reply here.
Back
Top