CME Group launched cash-settled single-stock futures on more than 50 stocks, including Apple, Nvidia and Micron Technology, in late July, trading 23 hours a day. Unlike other futures contracts, these products do not qualify for the favorable 60/40 tax treatment: gains are fully taxed at ordinary income rates, which can reach up to 37%. Using these contracts as hedges can trigger a constructive sale, forcing immediate taxation of unrealized gains if the hedge substantially eliminates both upside and downside exposure. The wash sale rule also raises uncertainties: selling a stock at a loss and purchasing a futures contract on the same stock may trigger this rule, though tax authorities have not yet clarified this point.
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