@samzandt
You can elect to have FOREX and currency transactions to be treated under Section 1256.
How to do it.
Write yourself a letter documenting your intention signed and dated before you start trading,
and put with your tax records.
Then you can report FOREX on Form 6781.
Otherwise your Forex trades are ordinary income.
If you report a huge FOREX loss on the "Other Income" line, I think you can expect to be audited.
