You really have to wonder what sorts of rimjobs the commodity trading lobbyists were giving the congresscritters back in 1981-82 when section 1256 got
added to the tax code. This is the section that deals with gains/losses on regulated futures contracts and their associated options.
- All futures gains/losses are treated as 60% long-term / 40% short-term
None of this crap where you have to keep track of holding periods.
And even if you only held positions for a few minutes in a fast-moving market, who cares? It still counts as 60% long-term.
Which means that if you're, say, in the 25% marginal bracket for
ordinary income, your effective rate for futures gains is
60% * 15% + 40% * 25% = 19%
Even if you're unlucky enough to be in the AMT Sweet Spot where the marginal rate is 45%
better to be, say, dealing in gold and silver futures, where the corresponding effective marginal rate is 27%,
than to be buying real, live bullion,
whose gains are taxed at the "collectibles" capital gain rate of 28% --- for some mysterious reason, this rate has keeps getting ignored in the successive rounds of capital-gain tax cuts (...insert various conspiracy theories
about why the federal government wants to discourage ordinary mortals from owning bullion...)
While the $3000 limit for applying losses against ordinary income still applies,
you can carry losses backwards up to 3 years.
Meaning if, say, in 2001 (just to pick a random year) you managed to lose lots of money in futures trading, but had huge futures gains in 1999, you could apply the 2001 losses to your 1999 return and get a mongo refund.
Awfully funny how none of this applies to stocks.