Forex taxation and how your gains on investment become your tax liability should ultimately be discussed with your accountant. Every year before tax day, you should make a copy of your trading report for the year, in which you can find all your trades, profits and losses.
According to Robert A. Green, CPA and CEO of www.GreenTraderTax.com, “retail spot forex contracts in major currencies may qualify for lower 60/40 tax rates in Section 1256g (foreign currency contracts), riding the coattails of interbank forward contracts — after making a valid opt-out election from Section 988 (foreign currency transactions). The new CFTC forex trading rules may help your case since the CFTC Chairman’s “Gensler letter” implies the term “spot forex” is a misnomer since it’s “futures-like.””
Robert continues “Financial market regulators and their rules are different from the IRS and their tax rules. The IRS may not respect these additional arguments, since regulations don’t necessarily set precedent for tax purposes.”
