The $3000 capital loss deduction limitation applies only to futures on FOREX. FOREX futures are subject to I.R.C. Section 1256 contract rules and thus treated as capital gain or loss. This tax treatment is beneficial when in a profit position as the 60/40 rules apply. This means that 60 percent of the gains are taxed as long-term gains and 40 percent are taxed as short-term gains, regardless of the holding period. Long-term capital gains typically receive a much lower tax rate over short-term gains. Spot or cash FOREX, by default, falls under I.R.C. Section 988 and is not subject to short-term or long-term capital gains tax, but instead is reported as “other income” and is subject to your ordinary income tax rate. Since I.R.C. Section 988 gain or loss is taxed as ordinary income, you are able to overcome the $3,000 dollar a year loss deduction limitation.