Explain the 60/40 Capital Gains Split in Simple Terms.
The 60/40 capital gains split is a tax rule where 60% of the total net gain or loss from Section 1256 contracts is treated as long-term capital gain or loss. The remaining 40% is treated as short-term capital gain or loss.
This blend is often advantageous for traders because long-term gains are taxed at lower rates than short-term gains, which are taxed at ordinary income rates. This applies regardless of how long the contract was held.
