TRADERS
GUIDES:

2013 GTT Guide: 2012 Tax Return Examples for Section 1256 Contracts, Futures & Forex Traders (Individual and Entities)

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 2012, the top Section 1256 contract tax rate is 23%. In 2013, the top 60/40 rate will rise to 28%.

Section 1256 contracts include U.S. futures, options on futures, foreign futures with a CFTC and IRS letter, broad-based indexes, options on broad-based indexes, forward forex with the opt out election into Section 1256g and options on commodities/futures ETFs taxed as PTP (publically-traded partnerships).

If you traded Section 1256 contracts and/ or forex as a business, as an individual or an entity, you should learn special tax-filing strategies and how to file a correct income tax return – one that takes advantage of trader tax status.

We provide examples of complete federal and state tax returns for many types of traders and investors. You should find the sample federal and state tax return that matches your situation, and this will take the guesswork out of this year's tax preparation. This is the closest you can come to having GreenTraderTax CPAs prepare your federal and state income tax returns. Of course, if you have questions after using our guides, you can sign up for a consultation and/or our preparation services.

April 1, 2013 update about PFG theft losses:
In our 2013 GTT Guide: 2012 Tax Return Examples for Section 1256 Contracts, Futures & Forex Traders, we added an example 2012 tax return example showing a PFG theft loss deduction in accordance with IRS Rev. Ruling 2009-09 and Rev. Proc. 2009-20. Notice the Schedule A (line 28) deduction without any limitation, coming from Form 4684 with worksheet, the footnotes and signature block. This example tax return reflects a $100,000 deposit loss, 95% loss calculation ($95,000), and after adding back the 30% recovery in 2012 ($30,000), the Form 4684 and Schedule A line 28 theft loss deduction is $65,000.

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