Are CFDs Considered “Securities” for US Tax Purposes?
CFDs are generally not considered "securities" for US tax purposes but are treated as capital assets. This distinction is important because the wash sale rule applies only to "stock or securities." However, the IRS may argue that a CFD is a contract with respect to a security, making the wash sale rule applicable.
Glossar
Wash Sale Rule
Constraint ⎊ The Wash Sale Rule, within cryptocurrency, options, and derivatives trading, disallows claiming a tax loss on a sale if a substantially identical asset is purchased within a 30-day period before or after the sale date, effectively preventing artificial loss harvesting.
Tax Purposes
Liability ⎊ Tax purposes within cryptocurrency, options trading, and financial derivatives necessitate precise categorization of gains and losses, often determined by holding periods and the character of the underlying asset.