A few additional comments:
- In general, forex transactions are covered under Section 988 of the code. As such, they are treated as ordinary income or loss. With losses, this can be taxpayer favorable as it reduces other ordinary income and not subject to the $3,000 capital loss limitation.
- As a result, forex taxed under Section 988 is not included with the net investment income groupings.
- There is an "opt-out" capital gains election, but this forum is not the place to discuss whether this is in your best interest. Additionally, this election is for prospective transactions; no hindsight.
- Depending on your trading level, it may be in your best interest to locate a tax professional that deals with trading and traders.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
