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Thread: Green Trader Tax

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#3 (permalink)

03-12-2006, 11:11 AM

GreenTrader Tax GreenTrader Tax is offline

CPA, CEO Green & Company CPAs, LLC

Join Date: Mar 2006

Posts: 177

GreenTrader Tax is on a distinguished road

forex spot taxation

Excerpt from http://www.greencompany.com/Educatio...Currency.shtml

"Thankfully, there is an exception in IRC 988 for traders who trade in forex forward contracts as a capital asset. Traders may elect out of IRC 988 for the more tax-beneficial IRC 1256 60/40 treatment. Rather than pay taxes on forex gains at higher ordinary tax rates (up to 35 percent), they are able to pay taxes at the lower 60/40 rates (up to 23 percent).

Notice the rule says forward contracts and it does not mention spot forex, which the majority of traders trade. An argument can be made for applying these same rules to spot forex, too. GreenTrader is working with the IRS national office to clarify these rules so there is no further uncertainty.

Robert A. Green, CPA & CEO
GreenTraderTax & GreenTraderLaw

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Last edited by GreenTrader Tax; 03-12-2006 at 10:51 PM..

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