How are futures trades taxed?

Section 1256 uses a “60/40” rule: 60% of any gain or loss is treated as long-term capital gain or loss, and 40% is treated as short-term. This applies no matter how long you actually held the position.

Section 1256 contracts are also marked to market at year-end. Open positions on December 31 are treated as if they were sold at fair market value on that date, with any unrealized gain or loss reported for that tax year.

Traders are provided annual tax documents, typically Form 1099-B, summarizing their reportable activity. These are usually issued by mid-February for the prior tax year.

Tax treatment can vary based on your entity type, residency, and personal situation. For personal tax advice, please consult a qualified tax advisor.

The content provided is for informational purposes only and should not be considered trading, investment, tax, or legal advice. Please consult a licensed professional before making any tax or financial decisions.