KPMG report: Implications of designations of Bourse de Montreal and European Energy Exchange as “qualified boards of exchange”
The designations will cause certain contracts traded through these exchanges to be treated as section 1256 contracts.
The IRS designated Bourse de Montreal as a “qualified board of exchange” in Rev. Rul. 2024-22 (read TaxNewsFlash) and also designated European Energy Exchange as a “qualified board or exchange” in Rev. Rul. 2024-23 (read TaxNewsFlash).
These designations will cause certain contracts traded through these exchanges to be treated as section 1256 contracts after the effective date of the rulings, which raises several complex issues, including:
- Effect on previous reporting provisions
- Effective date of the guidance and transition rules for affected contracts
- Scope of affected contracts
- Interaction of the new section 1256 status for affected contracts with the mixed straddle rules
- Interaction of the new section 1256 status for affected contracts with the rules for dealers and traders in securities under section 475
Read a December 2024 report prepared by KPMG LLP that provides a detailed analysis of the above issues: What’s News in Tax: Did the Tax Treatment of Your Futures Contracts Just Change?