Capital Gains for FOREX

[tcjams]

I found this information to be very enlightening. Don't really know how this applies to "this" particular" situation, but thought I'd share.

The Advantage of Section 1256 for Currency Traders Under Section 1256, forex traders can have a significant advantage over stock traders. By reporting capital gains on IRS Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles), forex traders are allowed to split their capital gains on Schedule D using a 60% / 40% split. This means that 60% of the capital gains are taxed at the lower, long-term capital gains rate (currently 15%) and the remaining 40% at the ordinary or short-term capital gains rate, which depends on the tax bracket the trader falls under (as high as 35%). This results in an average rate of 23%, which is 12% less than the regular (short-term) rate.

http://www.forex-day-trading.com/forex-taxes.htm

[amickn]

hope that applys to us thanks

[talion1011]

Yup. The biggest problem we have is the lack of documentation. A lot of the tax rules are in regards to forex contracts, and not actual physical cash. Since we're not cashing out at a broker, we don't receive a 1099 and since we didn't purchase the dinar at a broker, we have no proof of cost basis (well, at least some of us don't have proof.. especially if you bought the dinar in Iraq while deployed or working there.)