In Revenue Ruling 2026-16 (released August 10, 2026), the IRS ruled that the ICE Endex, which is a regulated exchange of the Netherlands, is a qualified board or exchange within the meaning of IRC Section 1256(g)(7)(C).

Background

IRC Section 1256 stipulates that contracts classified as "section 1256 contracts" are marked to market at the end of each tax year as if those contracts were sold for fair market value. Subject to important exceptions, any gain or loss from the mark is treated as 60% long-term capital gain or loss and 40% short-term capital gain or loss, regardless of how long the taxpayer actually held the contract. Under IRC Section 1256(b)(1), the term "section 1256 contract" includes a regulated futures contract, foreign currency contract, nonequity option, dealer equity option and dealer securities futures contract. With the exception of a foreign currency contract, a "section 1256 contract" must be traded on or subject to the rules of a "qualified board or exchange," as defined in IRC Section 1256(g)(7).

IRC Section 1256(g)(7) defines the term "qualified board or exchange" as: (A) a national securities exchange that is registered with the Securities and Exchange Commission, (B) a domestic board of trade designated as a contract market by the Commodity Futures Trading Commission, or (C) any other exchange, board of trade, or other market that the Secretary of the Treasury or a delegate determines has rules adequate to carry out the purposes of IRC Section 1256.

Applicability

The ruling is effective for contracts entered into on or after September 1, 2026. Further, the IRS has consented to taxpayers changing their method of accounting for ICE Endex contracts entered into on or after September 1, 2026, and waived the requirement to file a Form 3115. The change is made on a cut-off basis and thus does not apply to ICE Endex contracts that were entered into before September 1, 2026.