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Question: Can you claim losses on forex currency trading for 2009 tax return?if you are an individual, no other income?

(Posted by: Teresa on 2009-09-09 15:00:46)

How much could you claim? if you can't claim the whole losses could it be carryon to next future years until Zero. Thanks

Posted by: Bees Knees on 2009-09-09, 15:23:28

Foreign currency trading is a capital transaction. You can deduct up to $3,000 per year in net capital losses. Any excess losses that are not used or are not needed (because your income is below the filing requirement) are carried forward to the following year. If not used up in the following year, it carries over to the next, and so on, and so on, until used up. There is no limit as to the number of years it can carry forward.

Posted by: v b on 2009-09-09, 15:24:08

If these are 1256 contracts (currency futures and options traded on US exchanges), then you will get a 1099 showing the information to put on form 6781. In any given year, you can claim up to $3000 of loss against other income and carry it forward. Forex spot and forward contracts are treated as ordinary income and you report them on line 21 as other income. If you trade enough to be a trader (which isn't easy to do), you could have an NOL. Personally, I'd want the 1256 treatment.