1256 Contract
A 1256 Contract, as defined in section 1256 of the US Internal Revenue Code, is any regulated futures contracts, foreign currency contracts, non-equity options (broad-based stock index options [including cash-settled ones], debt options, commodity futures options, and currency options), dealer equity options, and any dealer security futures contracts. For US Federal income tax purposes, mark-to-market accounting is used for each 1256 contract as of the end of each tax year, and such contracts are treated as sold for its fair market value on the last business day of such taxable year (i.e.