Does the Net Investment Income Tax (NIIT) Apply to Section 1256 Gains? ▴ Learn

Does the Net Investment Income Tax (NIIT) Apply to Section 1256 Gains?

Yes, the 3.8% Net Investment Income Tax (NIIT) generally applies to Section 1256 gains for taxpayers whose modified adjusted gross income (MAGI) exceeds certain thresholds. NIIT applies to investment income, which includes capital gains from Section 1256 contracts.

However, the NIIT does not apply if the trader qualifies as a "Trader in Securities" and makes the Section 475(f) mark-to-market election.

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Does Trading on a non-US Regulated Exchange Qualify for Section 1256 Treatment?

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What Documentation Is Required to Prove a Futures Contract Qualifies for Section 1256?