EDUCATION CENTER
Tax Treatment: Securities, Futures, Forex, ETFs & More

There are complexities in sorting through different tax-treatment rules and tax rates. Section 1256 contracts have lower 60/40 tax rates, with 60% being a lower long-term capital gain even on day trades, and 40% being the short-term rate, which is the ordinary tax rate. At the maximum tax brackets for 2013 and 2014, the top Section 1256 contract tax rate is 28%, 12% lower than the top ordinary rate of 39.6%.

In this chapter, we cover many different trading instruments and how they’re treated come tax time. In addition to these trading vehicles, more traders are gaining access to swaps and derivatives. Tax treatment for these instruments is complex, and we covered this topic in detail on our blog: “Tax treatment for swaps.” We also recently covered bitcoin and plan to cover NADEX binary options soon.

Tax treatment is confusing
Is it ordinary or capital gain or loss treatment? Can you benefit from lower long-term capital gains rates on securities held over 12 months or on Section 1256 contracts with the 60/40 blended MTM rate? Do wash sale loss deferral rules apply? Do you report realized transactions only, or also unrealized transactions with mark-to-market accounting?

This is an excerpt from Green’s 2014 Trader Tax Guide

Copyright © 2014

Consider a 30-minute consultation with Robert A. Green, CPA or Darren Neuschwander, CPA, co-managing members of Green NFH, LLC.

     

Many Webinars in March

Highlighted Recent Recordings:

*Entities & Retirement Plans for Traders
*Trader Tax Law Update: Current Developments
*2013 Tax Reporting & 2014 Planning
*Forex Taxation
*Audits of Performance Records
*Kick-Off to 2013 Tax-Filings for Traders
*ObamaCare taxes are starting to affect traders
*The Tax Court Was Right To Deny Endicott Trader Tax Status
* Investment management: Key updates
*Learn the DOs and DON’Ts of using IRAs and other retirement plans

Trader Tax Center

Tax Newsletter & Calculators

Highlights (see the full archive):

Mar 27: Protect yourself from market losses with a Section 475 MTM election Read More

Mar 25: IRS guidance on bitcoin transactions will chill its use Read More

Mar 24: SEC Large Trader Reporting Rule Read More

Feb. 27: Another trader tax court loss (Assaderaghi) Read More

Feb. 1: Net investment tax details Read More

Jan 14: New IRS guidance on SE tax deductions affects partnership AGI-deduction strategies. Read More

Jan 9: A major tax reform bill in 2014 is unlikely, and “tax extenders” may be history, too. Read More

Jan 7: Kick off to 2013 tax filings for traders. Read More

Dec 4: IRS final regulations for Net Investment Tax help traders. Read More

Dec 3: Bitcoin is a hot commodity, but is it taxed like commodities, assets, or currencies? Read More

Nov 15: Another non-business trader gets busted in tax court trying to cheat the IRS. Read More

Nov 6: Hedge fund investors depend on “assurance” from quality independent CPA firms. Read More

Oct 29: ObamaCare taxes are starting to affect traders. Read More

Sept 15: Not Easy For New Yorkers To Escape Big Apple's Tax Bite. Read More

August 30: The Tax Court Was Right To Deny Endicott Trader Tax Status Read More

August 18: Common trader tax mistakes Read More

July 24: Learn the DOs and DON’Ts of using IRAs and other retirement plans in trading activities and alternative investments Read More

March 31: PFG investors can deduct theft losses on 2012 tax returns with Rev. Proc. 2009-20 safe harbor relief. That’s great news! Read More

March 5: Caution, downloading securities Form 1099-Bs into TurboTax often leads to incorrect tax filings Read More

Sept 5: High-income traders and ObamaCare’s 3.8% Medicare tax Read More


GreenTrader blog archive, Forbes blog, Benzinga blog.

 




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