There are potential tax benefits for investors when using futures contracts.
We are not a CPA or in the tax accounting business. What we discuss here should be reviewed and researched further between you and your CPA.
Futures receive 1256 contract treatment for federal taxes in the US. Accounting for individual trades is not required for tax purposes. A futures account is marked to market with any profit being taxed at 60% long-term capital gains / 40% short-term capital gains. Marked to market is a term that means both realized and unrealized gains and losses are accounted for in one positive or negative number for the account for that tax year.
The IRS also allows for a loss carry-back election against prior years 1256 gains. Loss carry-forward is also possible for any unused loss amounts. Clearly these are potential tax advantages in many situations.
Please talk to your tax professional about this as we are not tax professionals or CPAs. These are general statements to help guide conversations with your tax professional. Occasionally a CPA will be unfamiliar with futures and their tax implications. Just have them look it up to get the resolution on taxes you need. We are always happy to have phone calls or meetings with your CPA if that would help.
We are also able to manage assets within an IRA if you wish.
THE RISK OF LOSS IN TRADING FUTURES CAN BE SUBSTANTIAL. YOU SHOULD, THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN COMMODITY TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.