sec1256

[chefcman]

what is the cost basis for sec 1256 items (ie options) at the beginning of 2011given that they are reagarded as sold at the end of 2010 for tax purposes

 

[sjaljalkfls]

Seems that you have elected mark to market accounting, Since all positions marked to market (priced to year end market prices) at year end, there are no wash sales to calculate or report to the IRS.
After you elect mark to market accounting, your items is considered to be sold out at the year end. Your open positions are still open, but now the year end prices become the cost basis of these going into next tax year. So your year end (2010) price are the cost basis of 2011
Hope that helps you!

TradeMax- Help prepare your Mark to Market form 4797