tax treatment for binary options

Asked August 21, 2019, 3:59 PM EDT

I trade an investment vehicle called binary options through the Nadex exchange in Chicago. These instruments are fully regulated by the CFTC. All perfectly legal, albeit relatively new (10 yrs?).
My problem is that although I have done extensive online searches, I have been unable to find out how the profit/loss of these instruments are handled by the IRS at tax time. Some say they are futures contracts, others say they are more like regular stock options. Yes, I went to IRS.gov. Their search box returned 0 results for binary options. Just wanting to know how to declare a profit/loss for IRS purposes, including which form or publication to use.
I don't trade so much that I would have an accountant or tax attorney, but I'm hoping someone out there is one and/or has dealt with this issue.
Thanks in advance.

Michigan

1 Response

Thanks for contacting Michigan State University Extension with your question about tax treatment for binary options. We do not have the training to answer your question. I suggest you contact a professional tax attorney or tax accountant with knowledgeable expertise to assist you with answers.