Is the 60/40 Rule Mandatory for All Section 1256 Contracts?
Yes, the 60/40 rule is mandatory for all gains and losses realized from Section 1256 contracts, including those marked-to-market at year-end. A taxpayer cannot elect out of this treatment for these specific instruments.
The only exception is if the contract is part of an identified mixed straddle where an election is made to apply a different tax treatment.
