1256 Contract

A 1256 contract is an IRS-regulated type of financial investment. It's the same kind of investment you might buy when you put money in the stock market or in a mutual fund. The difference is that when you buy a 1256 contract, the IRS (the US government) taxes any gains or losses differently than with other types of investments. When you make money on a 1256 contract, you'll only have to pay taxes on 60% of the gain, and you can spread out the taxes over a period of three years. On the other hand, if you make a loss, you can use it to reduce your taxable income in the current year, and then the next two years after that. This makes it a great way for investors to save money on taxes on some of their investments.