Section 1256 contracts are handled differently than other securities filed on Schedule D. Examples of Section 1256 contracts include future contracts and broad-based index options.
TradeLog automatically identifies most contracts and treats for Section 1256 reporting:
There are no IRS requirements to itemize your futures or broad-based index option trades to file your taxes.
The wash sale rule does not apply.
Total gain/loss for 1256 contracts is split 60/40 - 40% is considered short term capital gains, 60% is considered long term capital gains.
All Section 1256 contracts held open at year end are marked-to-market at fair market value.*
Section 1256 contracts are reported on Form 6781, with certain totals reported on the Schedule D.
*The mark-to-market handling of year-end open section 1256 contracts is not the same as the IRS Section 475(f) election for Mark-to-Market (MTM).
You may also want to review our instructions for Futures and Broad-Based Index Options settings to learn about TradeLog's automated identification for these contracts.
Answering this question would be helpful - "Why is this information helpful to you as a user of Trade Log software?"
Jeffrey, thanks for your comment. We added a few links to the article where you can review TradeLog's settings for Futures and Broad-Based Index Options. Also we gave a link for reporting Gains/Losses on Section 1256 contracts.
Please sign in to leave a comment.