Investing in Project Alpha, a commodity trading pool managed by Zillionaire Investments LLC, offers unique tax benefits due to its focus on U.S. exchange-traded futures under Internal Revenue Code § 1256. These benefits can potentially reduce your tax burden and simplify reporting, making it an attractive option for accredited investors. Below are the key tax advantages, followed by a detailed explanation of how they work and why they matter.
 

• Lower Blended Tax Rate: Gains are split 60% long-term and 40% short-term, potentially reducing your effective tax rate by 8–10% compared to short-term stock or option trades.

• No Wash-Sale Restrictions: You can claim losses immediately without the 30-day wash-sale rule, simplifying year-end tax planning.

• Loss Carry back Option: Net losses can be carried back up to three years to offset prior § 1256 gains, potentially leading to tax refunds.

• Pass-Through Structure: As a partnership, Project Alpha avoids federal income tax, passing gains, losses, and expenses directly to you via a Schedule K-1.

• No Self-Employment Tax: Futures gains are treated as investment income, exempt from self-employment tax, reducing your overall tax liability.
   

Understanding § 1256 Tax Treatment
Project Alpha’s trading in U.S. futures contracts falls under Internal Revenue Code § 1256, which provides a favorable tax framework. At the end of each tax year, all open futures positions are “marked to market,” meaning they’re treated as sold at their fair market value on December 31. This results in a 60/40 split: 60% of gains or losses are taxed as long-term capital gains (typically at a lower rate, up to 20%), and 40% as short-term capital gains (taxed at ordinary income rates, up to 37%). This blended rate often results in a lower tax burden compared to fully short-term gains from stocks or options, potentially saving you 8–10 percentage points on your tax bill.
 
Freedom from Wash-Sale Rules
Unlike stock or option trading, § 1256 contracts are exempt from wash-sale rules. This means you can claim a loss on a futures contract sold on December 31 and immediately repurchase a similar contract on January 2 without losing the ability to deduct the loss. This flexibility eliminates the complex record-keeping required for equities, where wash-sale rules can defer losses if you repurchase within 30 days.

Loss Carryback for Tax Refunds
If Project Alpha incurs a net § 1256 loss in a tax year, you can elect to carry it back up to three prior tax years to offset previous § 1256 gains. This election, made via IRS Form 6781, could result in a refund of taxes paid in those years, helping to smooth out tax volatility and improve your after-tax returns.

Simplified Partnership Reporting
As a limited partnership, Project Alpha pays no federal income tax itself. Instead, all gains, losses, and deductible expenses are passed through to you, the limited partner, on a single year-end Schedule K-1. This streamlined reporting reduces administrative hassle, and the partnership handles the detailed trade-by-trade records required for Form 6781, sparing you the burden. Additionally, futures gains are classified as investment income, exempt from self-employment tax, which can further lower your tax liability.

Why This Matters for You
These tax advantages align with Project Alpha’s commitment to transparency and investor-friendly structures. The 60/40 tax split, absence of wash-sale restrictions, loss carryback option, and pass-through reporting make your investment experience more tax-efficient and straightforward. However, tax rules can vary based on your individual circumstances, so it’s wise to consult a tax advisor to understand how these benefits apply to you.

Detailed Tax Benefits of Project Alpha’s Structure
Project Alpha, managed by Zillionaire Investments LLC, is designed to deliver institutional-grade performance with a transparent, investor-centric approach. Its focus on U.S. exchange-traded futures under Internal Revenue Code § 1256 creates a tax-efficient framework that can enhance after-tax returns for limited partners. Below, we dive into the specifics of these tax advantages, how they work, and why they make Project Alpha a compelling choice for accredited investors seeking both performance and simplicity.

Overview of Project Alpha’s Tax Structure
Project Alpha operates as a commodity trading pool, structured as a rolling limited partnership capped at $50 million to maintain agility in its trading strategy. By trading highly liquid futures markets—S&P 500, NASDAQ, crude oil, and gold—using a manual, intraday price-action strategy, the fund generates gains and losses that fall under Internal Revenue Code § 1256. This section of the tax code provides several unique benefits that distinguish futures trading from other investment vehicles like stocks or options. Additionally, the fund’s partnership structure ensures that tax obligations are passed through to investors, simplifying the process and aligning with the firm’s ethos of transparency.

The 60/40 Tax Split: A Lower Effective Tax Rate
Under § 1256, all futures positions are “marked to market” at year-end, meaning they’re treated as if sold at their fair market value on the last business day of the year. The resulting gains or losses are automatically split: 60% are taxed as long-term capital gains, and 40% as short-term capital gains, regardless of how long the position was held—whether ten minutes or ten weeks. Long-term capital gains are taxed at a maximum federal rate of 20% (plus the 3.8% Net Investment Income Tax for high earners), while short-term gains are taxed at ordinary income rates, up to 37%. This creates a blended tax rate that’s typically 8–10 percentage points lower than the rate applied to fully short-term gains from stock or option trades.

For example, if you realize a $10,000 gain in Project Alpha, $6,000 is taxed at the long-term rate (e.g., 20%), and $4,000 at the short-term rate (e.g., 37%). Assuming a high-income tax bracket, this could result in a blended rate of approximately 26.8% (0.6 × 20% + 0.4 × 37%), compared to 37% for a fully short-term gain—a significant savings. This tax efficiency can enhance your after-tax returns, making Project Alpha’s 12% annualized preferred return, paid monthly, even more attractive.

No Wash-Sale Restrictions: Immediate Loss Deductions
One of the most investor-friendly aspects of § 1256 is the exemption from wash-sale rules, which apply to stocks and securities. In equity trading, if you sell a stock at a loss and repurchase a substantially identical security within 30 days, the loss is deferred under the wash-sale rule, complicating tax planning and record-keeping. With § 1256 contracts, you can claim a loss on a futures position sold on December 31 and repurchase a similar contract on January 2 without losing the deduction. This flexibility allows Project Alpha’s investors to realize losses promptly, potentially offsetting other taxable income, and avoids the year-end reconciliation headaches faced by equity traders.

Loss Carryback: Potential Tax Refunds
If Project Alpha experiences a net § 1256 loss in a tax year, you have the option to carry that loss back to offset § 1256 gains from up to three prior tax years. This election, made by filing IRS Form 6781, can result in a refund of taxes paid in those earlier years. For instance, if the fund incurs a $50,000 loss in 2025, you could apply it against § 1256 gains from 2022, 2023, or 2024, potentially recovering taxes paid previously. This feature can help smooth out the tax impact of volatile years, providing a financial cushion and enhancing the fund’s appeal for tax-conscious investors.

Pass-Through Partnership Structure: Simplified Reporting
As a limited partnership, Project Alpha does not pay federal income tax at the fund level. Instead, all gains, losses, and deductible expenses are passed through to you, the limited partner, via a single year-end Schedule K-1. This pass-through structure eliminates double taxation and simplifies your tax reporting. The partnership handles the detailed trade-by-trade records required for Form 6781, sparing you the administrative burden. Moreover, futures gains are classified as investment income, not subject to self-employment tax (typically 15.3% on earned income), which further reduces your tax liability.

Additional Tax Considerations
The tax advantages of § 1256 are complemented by Project Alpha’s investor-friendly structure. The fund’s 30-day rolling commitment, with no long-term lockups, allows you to withdraw capital or roll over proceeds for compounded returns, providing flexibility that aligns with tax planning needs. The real-time transparency portal, which streams live positions, profit and loss statements, and risk metrics, ensures you have the data needed to monitor your investment and make informed tax decisions. However, tax rules can vary by state, locality, and individual circumstances, so consulting a tax advisor is crucial to maximize these benefits.

Why Choose Project Alpha?
Project Alpha’s tax structure is designed to align with Zillionaire Investments’ ethos of transparency and partnership. The 60/40 tax split, exemption from wash-sale rules, loss carryback option, and pass-through reporting create a tax-efficient