Using 60/40 tax rule for spot
MB Trading has a section on their website called Tax Tips for Traders. There, they say that the 60/40 split (under Section 1256), which enables you to pay (lower) long term capital gains tax on 60% of your earnings and short term capital gains tax on the other 40%, was really designed for forex futures traders. If you trade on the spot market, you would normally be taxed under Section 988, at ordinary interest gains rate. So the 60/40 is better. Though it wasn't designed for you, as a spot trader you can "internally" note your intention to opt out of Section 998 and opt in to Section 1256 instead. You do not have to tell the IRS about your decision beforehand.
Apparently this is the thing to do if you have gains -- you can save 12%. But if you end the year with losses, you're better off under Section 998. So maybe your "internal intention" is, uh, actually different from what you thought you remembered. So far, the IRS isn't poking into people's intentions.
Confused? Check out the MB Trading site. They can explain it better than I can. I am not a tax or financial advisor, that's for sure.
Also, there's a book called The Tax Guide for Traders by Robert A. Green (published in 2004.) Has anyone purchased this? If I end up getting it, I'll let you know if it is useful.