Financial instruments come in a variety of flavors the tax treatment is definitely arbitrary and not possible to be very consistent or logical about. 1- Over t

Financial instruments come in a variety of flavors the tax treatment is definitely arbitrary and not possible to be very consistent or logical about. 1- Over the course of a year I buy and sell hundres of stock issues, constantly incuring taxable events, and at the end I sell off the entire portfolio including short term cap gains rate (same as income rates). 2- I buy an ETF that does all the same trades, but when I sell I only get long term cap gains taxes. 3- I loan a company money (sell an note) to do this trading and a clause written for at the end of the year call the note for a value equal to the previous two scenarios. I incure taxation from a bond investment, 4- I buy an ETN (exchange traded note) that repays based on a formula as if the previous trades were made. Once again I pay long term capital gains on an equity investment. 5- I buy a future on the index I'm managing and invest an an amount equal to current price of the stocks in bonds to replicate the price performance on the ETN. When I sell a year, I incure two taxable events. 6- I have't even brought up options, so I can keep going. These are all the same, but they all have different taxable events and consider a realized gain something different.