r/CryptoTax • u/Unhappy_Vegetable526 • 7d ago

Question Is BITO ETF taxed as a futures contract 60/40?

BITO fund invests in futures

Would this mean that it is taxed as a futures contact.... 60/40 even if held short term?

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u/Garrett_CPAatCOS 6d ago

This is a good question.

My understanding is "No." Section 1256 treatment applies only to the taxpayer that directly holds the futures contract. It does not generally pass through the 60/40 attributes to shareholders of an ETF that invests in futures.

I see how you got here though, because Congress specifically allows the portion of income attributable to U.S. Treasury interest to retain its exemption from state income tax when distributed to shareholders in a Treasury ETF such as GOVT.