Its not about how you wish it to be. It is about how it actually is. If you have evidence that you don't need to report currency transactions, I'm all ears. But basically you are just saying you don't want to deal with it and you've never had any problems just ignoring the issue. I don't find that satisfactory.
Thanks for your reply, but can you explain more? Let's say for example I had profit of 5000 Euro, 5000 Yen, 5000 Swiss Franc from trading in futures contracts denominated in the respective currency. But, of course, I can't report my taxes in Yen! Therefore, how would I even give a dollar amount on my tax return, especially considering when the profits came in daily at varying exchange rates????? The more you guys discuss this topic, the more I think I'll just have to trade in my IRA!
it's been a while since I traded futures, what is it? form 8924? You report your profit or loss from the futures on that form. You, ib and the irs ignore your profit from the currency conversion. Some go so far as to report a loss as a cap gains loss, and it is not subject to the 3k max. But if you intend to be profitable, that is pushing it a little in my opinion.
Well, a new report from the nonpartisan Tax Policy Center found that long-standing tax breaks are set to end at the conclusion of the year, developing the proverbial "fiscal ledge." If legislators do not address the problem soon, most Americans will be paying a lot more in taxes next year. That involves the typical American household. Some might need instant cash to pay for taxes this year. Be able to pay taxes beforehand to avoid penalty.
Two issues. Only a few foreign futures contracts qualify for lower Section 1256 60/40 tax rates. They obtained a CFTC no action letter and IRS revenue ruling granting 1256 treatment. We covered this on our blog http://www.greentradertax.com/tax-treatment-for-foreign-futures/. If 1256 applies, then use MTM, but if not, treat the foreign futures like securities with realized gain or loss treatment and line-by-line reporting. Buying and selling securities in foreign currencies related to trading on foreign exchanges around the world has accounting headaches and complications. We cover this fully in Green's 2014 Trader Tax Guide. http://www.greentradertax.com/shop-guides/greens-trader-tax-guide/. Excerpts: Accounting for foreign securities can be confusing. Many traders have trading accounts in foreign countries and the reporting can be challenging. The tax rules involve an election to keep your books in a foreign currency — a qualified business unit — which makes accounting easier than having to convert each trade into U.S. dollars on the day of the transaction. Instead, you can use an average currency conversion rate for the year. Using a foreign currency to purchase foreign trading instruments. Traders are stuck with Section 988 ordinary gain or loss treatment for physical currencies used for investing and trading purposes. They can’t opt-out of Section 988 with a capital gains election as forex traders may, since currency is physical whereas forex is a forward contract — even spot. Sometimes taxpayers purchase foreign currencies to use to buy and sell foreign equities or futures where those transactions are conducted on a foreign exchange. Traders may purchase foreign stocks in a foreign brokerage account or even in U.S.-based accounts offering global access. If a trader buys Euros, holds them in his account and converts them back to U.S. dollars the following year, the gain or loss is ordinary. The trader can’t claim short- or long-term capital gain or loss or the Section 1256g lower 60/40 capital gains rates. It’s more complicated when the trader buys and sells foreign stocks......(see page 33 of the guide).