Section 1256 contracts lacerte
Sec. 1256, as enacted as a part of the Economic Recovery Tax Act of 1981, P.L. 97-34, provided rules applicable to exchange-traded regulated futures contracts on foreign currencies but did not provide rules applicable to economically similar over-the-counter contracts entered into with banks. Under Sec. 1256(a), certain contracts are generally required to be marked to market if held by the taxpayer at the close of the tax year and are further characterized as generating gain or loss that is 40% short-term capital gain or loss and 60% long-term capital gain or loss.