I am just a casual Forex spot trader, actually traded only a couple of times in 2022. And I lost $2000.
I am not a day trader either trading in business.
Q1) . Do I claim my loss as Capital Loss or Ordinary Loss?
( I am assuming my loss is Capital Loss Schedule D ??? )
Q2). If it's Capital Loss -> Investment and Saving ( 1099DIV, 1099INT, 1099B . . .) is right Section to claim ?
If it's Ordinary Loss -> Other income 1099MISC is right Section to claim?
I spent a lot of time to search to determine whether Capital or Ordinary Loss, but each writer describes a little differently and I want to make sure it from knowledgeable people here. Also, if anyone gives me a guidance how to claim it in a right section, it would be very helpful.
Thank you so much.
You'll need to sign in or create an account to connect with an expert.
Currency gain/loss is ordinary income
UNLESS
you sign and date a written election to have currency transactions processed under Section 1256 40%/60% capital gains
before your first trade of the year and keep that with your tax documents.
Currency gain/loss is ordinary income
UNLESS
you sign and date a written election to have currency transactions processed under Section 1256 40%/60% capital gains
before your first trade of the year and keep that with your tax documents.
Most spot traders are taxed according to IRC Section 988 contracts, which are for foreign exchange transactions settled within two days, making them open to treatment as ordinary losses and gains. If you trade spot forex, you will likely be grouped in this category as a "988 trader."
fanfare,
Thank you very much for your time and help.
boblaa,
Thank you for your help and time. I will claim my loss as ordinary loss.
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
Michael16
Level 4
oldyoungguy
Level 3
kash9
Returning Member
kash9
Returning Member
k1taxes24
Returning Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.