topic Section 1256 Contract Wash Sale Rule in Get your taxes done using TurboTax

Section 1256 Contract Wash Sale Rule

tensor77 — Mon, 23 Feb 2026 12:40:54 GMT

I have a question regarding the wash sale rule for section 1256 contracts trading involving IRA accounts.

My understanding is that section 1256 contracts (ex. SPX cash settled options) do not trigger the wash sale rule. My question relates to a situation where section 1256 contracts were traded in both regular brokerage accounts (non-IRA) and IRA accounts. For example, if a loss incurred from trading section 1256 contracts in a regular brokerage account and then within 30 days similar/identical section 1256 contracts were bought & sold in a Roth-IRA account, the wash sale rule does not trigger due to rules associated with section 1256 contracts? Or, the wash sale rule applies to this situation, because the wash sale rule overrides the rules associated with section 1256 contracts? I browsed this community and tax rules/laws explained on the Internet but could not find a clear answer to this.

Thank you.

Re: Section 1256 Contract Wash Sale Rule

fanfare — Mon, 13 Feb 2023 04:30:54 GMT

the wash sale rule does not apply to Sec. 1256 because your activity is mark-to-market,

i.e. settled each day.

Don't give it another thought.

@tensor77

Re: Section 1256 Contract Wash Sale Rule

Mike9241 — Mon, 13 Feb 2023 05:04:41 GMT

from iRS PUB 550

Options and futures contracts. The wash sale rules apply to losses from sales or trades of contracts and options to acquire or sell stock or securities. They do not apply to losses from sales or trades of commodity futures contracts and foreign currencies. See Coordination of Loss Deferral Rules and Wash Sale Rules, later, for information about the tax treatment of losses on the disposition of positions in a straddle.

so it is not possible for the use of taxable and tax-exempt accounts to create waah sales.