Upon becoming profitable, traders should begin to think about the most advantageous income tax strategy to use. The written and signed statement in the above image is a redacted copy of my actual U.S. IRS Code Section 1256 Election. For income tax purposes in the U.S., forex profits and losses are lumped in with futures profits and losses in terms of tax treatment. As a default provision (where the taxpayer makes no election), IRS Code Section 988 will be applied to futures and forex profits and losses. Pursuant to Section 988, all such profits will be taxed as ordinary income and all such losses will be deductible as ordinary losses. However prior to the start of a trading/tax year, a forex and/or futures trader is allowed to opt out of Section 988 and into Section 1256.
Why did I elect into Section 1256? Because even if I had been scalping in 2022, I was entitled to a 60/40 split of profits. 60% of profits are treated as long-term capital gains, while 40% of profits are treated as short-term capital gains. In the U.S., the maximum long-term capital gains tax rate is 20%. So, that's a 20% or less tax rate applied to most of the profits and the ordinary tax rate (generally higher) applied to less of the profits. As a caveat, Section 1256 only allows a maximum of 3000 USD of total losses to be deducted.
Although the election must be made before any trade is placed within the tax year at issue, that election only need be memorialized internally. Whether a given taxpayer is a commodity pool operator or a sole proprietor (like most retail traders), it's a very good idea to draft, sign, date, and get witnessed, a formal statement. The above document can be used as a template for readily drafting such a statement. It's no coincidence that the above Election is dated December 31, 2021. Again, the Election need not be filed with any governmental agency, but the taxpayer should keep it safely stored in case of an IRS audit, etc. If the taxpayer files a tax return via software, that software will likey ask a simple question about electing out of 988 upon entering trading profits.
Essentially, a trader must estimate her/his likelihood of profitability in advance of any given trading/tax year. Obviously, this is much easier for a trader who is continuing to employ a profitable strategy from a prior year... or at least, trading a quantified and empirically tested strategy. Conversely, a trader who is not yet profitable has little incentive to opt into Section 1256. Of course, the IRS Standard Deduction must also be considered... especially by traders in lower ordinary tax brackets.
Nothing in this post may be construed to be legal nor tax advice. The author is not a licensed tax attorney nor a certified public accountant. For any and all questions and/or concerns regarding legal and/or tax advice for your specific tax situation, you must consult a licensed and/or certified tax professional in your specific jurisdiction.
(https://www.mql5.com/en/blogs/post/756757)
Statistics: Posted by JohnnyRy — Tue May 21, 2024 9:10 am — Replies 0 — Views 8
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live now
Statistics: Posted by Banzai — Tue May 21, 2024 9:03 am — Replies 83 — Views 17669
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Hello. I am not at home, I will working on new version when i will be back at home....one question,you want bands to Ma or to super trend?
I could be wrong, but I imagine he thought of the MAs as additional bands. This indicator was actually good 
Statistics: Posted by RodrigoRT7 — Tue May 21, 2024 8:51 am — Replies 445 — Views 217310
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KeltnerChannel_v2.mq4Not downloaded yet 5.74 KiB
StandardDeviationChannel.mq4Downloaded 4 times 12.76 KiB
S&Rmtf_TLB_BT.mq4Downloaded 3 times 58.19 KiB
[MTFOsc]Candlestick chart.mq4Downloaded 1 time 21.08 KiB
Candlestick chart mod.mq4Downloaded 3 times 31.8 KiB
Candlestick chart mod 2.mq4Downloaded 4 times 87.86 KiB
Statistics: Posted by dmnik — Tue May 21, 2024 8:10 am — Replies 3891 — Views 1134140
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Statistics: Posted by JohnnyRy — Tue May 21, 2024 7:51 am — Replies 232 — Views 9046
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Statistics: Posted by JohnnyRy — Tue May 21, 2024 7:38 am — Replies 4 — Views 364
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Statistics: Posted by Banzai — Tue May 21, 2024 7:36 am — Replies 333 — Views 33654
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Statistics: Posted by Banzai — Tue May 21, 2024 7:29 am — Replies 1553 — Views 175243
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If it helps you, here is the dollar index D1... only two signals. Arrows need settings
that is wery good.excellent.it is algo easy or complicated.?
i liked too much.
i think weekly chart not reach up point.
Statistics: Posted by guner — Tue May 21, 2024 7:24 am — Replies 1226 — Views 94824
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Statistics: Posted by BeatlemaniaSA — Tue May 21, 2024 7:18 am — Replies 4141 — Views 1116822
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RSI OverBought OverSold Signals
coder: Mr. Tools
date: June 11, 2021
In this version, you can change the arrow codes to any WingDings code.
If you see a green dot, get ready.
Go long when you see a green arrow.
Also in this version, you can choose to display green up arrows only,
or red down arrows only.
(on/off button)RSI Ob Os (up arrows + alerts) BT.mq4Downloaded 6 times 15.18 KiBcoder: Mr. Tools
date: June 11, 2021
In this version, you can change the arrow codes to any WingDings code.
If you see a green dot, get ready.
Go long when you see a green arrow.
Also in this version, you can choose to display green up arrows only,
or red down arrows only.
RSI Ob Os (down arrows + alerts) BT.mq4Downloaded 6 times 15.29 KiB
Statistics: Posted by Banzai — Tue May 21, 2024 5:55 am — Replies 2813 — Views 1353000
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XY.zipDownloaded 23 times 366.34 KiB
Statistics: Posted by WOLF — Tue May 21, 2024 5:10 am — Replies 629 — Views 368604
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Here is XU v015-Setup for everyone's perusal.
Xard777
Hello everyone.Xard777
The package is missing one indicator. Therefore, after uploading the template, there is one inactive element. from News reader.
All you need to do is add XU-v015 to the folder, add an indicator to the chart and save the template again.
The XU-v015 version is great, thank you very much XARD
best regards
stond
XARD: OOps! My Bad, that was me having a senior moment. Thanks stond for the update.
News reader.ex4Downloaded 25 times 103.15 KiB
Statistics: Posted by stond — Tue May 21, 2024 4:13 am — Replies 15265 — Views 3829252
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Hi everyone, what kind of moving average is this, It seems like hull moving average but not certain though
Its 2 hma(many variants) or t3 Or red k cora wave
Statistics: Posted by WOLF — Tue May 21, 2024 1:49 am — Replies 1549 — Views 507518
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Tradingview has oscillators made from cot dataLike this one
Statistics: Posted by WOLF — Tue May 21, 2024 1:19 am — Replies 702 — Views 61591
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