A Less-Known Federal Investment Income Tax Break
A Less-Known Federal Investment Income Tax Break: One of the least understood breaks on Federal taxation of investment income occurs when investors use Section 1256 contracts such as futures contracts for short-term trading. A potential advantage to using Section 1256 contracts is that net gains from trading are taxed 60% long-term and 40% long-term regardless of the holding period. Thus a short term trader may find that futures contracts offer tax savings on trading profits relative to other securities such as exchange traded funds.
Biltmore Capital Advisors LLC is not a tax or accounting firm. Please consult your tax advisor to determine if these facts are relevant to your particular situation.