Do I have this correct? UVXY is not Sec. 1256 [but tracks VIX futures, which are Sec. 1256]. The options on UVXY, however, are Sec. 1256.
UVXY is treated as a partnership for tax purposes. https://www.proshares.com/faqs/volatility-commodity-currency-proshares-taxation-faqs Options on UVXY should be treated as Section 1256 contracts, but your broker might classify them as equity options according to https://greentradertax.com/how-to-apply-lower-tax-rates-to-volatility-options/
And, is UVXY, a partnership, as you say, Sec. 1256? Incidentally, I'm curious, do any brokers list UVXY's gain or losses or UVXY options' gains or losses as Sec. 1256 on the year-end 1099?
UVXY does not appear to be a section 1256 contract. https://www.irs.gov/pub/irs-access/f6781_accessible.pdf I'd guess brokers will list the gain or loss from sales of UVXY on a 1099-B form (like for other sales of ETFs), and ProShares will send a K-1 for https://www.proshares.com/faqs/volatility-commodity-currency-proshares-taxation-faqs
I'm not an expert on taxes. In addition, my employer would not allow me to provide tax advise unless I was providing facts. This seems to be a gray area so the best I can do is refer you to the experts. I suggest you ask your broker if their 1099 vendor tags this symbol as 1256. That is your best resource.
Income passed down from the partnership‡ might get Section 1256 tax treatment. But, you'll probably save less in taxes than the cost of headache pills for dealing with the Schedule K-1. ‡This wouldn't apply to gain or loss from the sale of UVXY shares.