Form 6781 Form 6781 Gains and Losses From Section 1256 Contracts and Straddl

Version A, Cycle 1

Form

Gains and Losses From Section 1256
Contracts and Straddles

6781

Department of the Treasury
Internal Revenue Service

© Attach

OMB No. 1545-0644

2009

Attachment

to your tax return.

Sequence No.

A
B

Check all applicable boxes (see instructions).

Part I

82

Identifying number

Name(s) shown on tax return

C
D

Mixed straddle election
Straddle-by-straddle identification election

Mixed straddle account election
Net section 1256 contracts loss election

Section 1256 Contracts Marked to Market
(b) (Loss)

(a) Identification of account

(c) Gain

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Add the amounts on line 1 in columns (b) and (c) . .
Net gain or (loss). Combine line 2, columns (b) and (c)

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Form 1099-B adjustments. See instructions and attach schedule .
Combine lines 3 and 4 . . . . . . . . . . . . .

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4
5

Note: If line 5 shows a net gain, skip line 6 and enter the gain on line 7. Partnerships and S corporations, see
instructions.
6

7
8

If you have a net section 1256 contracts loss and checked box D above, enter the amount of loss to be
carried back. Enter the loss as a positive number
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6

Combine lines 5 and 6

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Short-term capital gain or (loss). Multiply line 7 by 40% (.40). Enter here and include on the appropriate line
of Schedule D (see instructions)
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8

Long-term capital gain or (loss). Multiply line 7 by 60% (.60). Enter here and include on the appropriate line
of Schedule D (see instructions)
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9

DRAFT AS OF
April 24, 2009

9

Part II
Gains and Losses From Straddles. Attach a separate schedule listing each straddle and its components.
Section A—Losses From Straddles

(a) Description of property

(b) Date
entered
into or
acquired

(c) Date
closed out
or sold

(d) Gross
sales price

(e) Cost or
other basis
plus
expense of
sale

(f) Loss.
If column (e)
is more than
(d), enter
difference.
Otherwise,
enter -0-

(g)
Unrecognized
gain on
offsetting
positions

(h) Recognized loss.
If column (f) is more
than (g), enter
difference.
Otherwise, enter -0-

10
11a

Enter the short-term portion of losses from line 10, column (h), here and include on the appropriate line of
Schedule D (see instructions) . . . . . . . . . . . . . . . . . . . . . . . .

11a (

)

b

Enter the long-term portion of losses from line 10, column (h), here and include on the appropriate line of
Schedule D (see instructions) . . . . . . . . . . . . . . . . . . . . . . . .

11b (

)

Section B—Gains From Straddles
(a) Description of property

(b) Date
entered
into or
acquired

(c) Date
closed out
or sold

(f) Gain. If column
(d) is more than (e),
enter difference.
Otherwise, enter -0-

(e) Cost or other
basis plus
expense of sale

(d) Gross
sales price

12
13a

Enter the short-term portion of gains from line 12, column (f), here and include on the appropriate line of
Schedule D (see instructions) . . . . . . . . . . . . . . . . . . . . . . . .

13a

b

Enter the long-term portion of gains from line 12, column (f), here and include on the appropriate line of
Schedule D (see instructions) . . . . . . . . . . . . . . . . . . . . . . . .

13b

Part III

Unrecognized Gains From Positions Held on Last Day of Tax Year. Memo Entry Only (see instructions)
(a) Description of property

(b) Date
acquired

(c) Fair market value on last
business day of tax year

(d) Cost or other basis
as adjusted

(e) Unrecognized gain.
If column (c) is more
than (d), enter difference.
Otherwise, enter -0-

14

For Paperwork Reduction Act Notice, see page 4.

Cat. No. 13715G

Form

6781

(2009)

Version A, Cycle 1
Form 6781 (2009)

Page

General Instructions

Offsetting Positions

Section references are to the Internal
Revenue Code unless otherwise noted.

and losses under section 1092
from straddle positions.

If there is a substantial decrease in risk
of loss to a taxpayer holding a position
because that taxpayer or a related party
also holds one or more other positions,
then those positions are offsetting and
may be part of a straddle. However, if an
identified straddle is properly
established, other positions held by the
taxpayer will not be treated as offsetting
with respect to any position which is
part of the identified straddle.

For details on section 1256 contracts
and straddles, see Pub. 550, Investment
Income and Expenses.

Box A. Mixed Straddle
Election

Section 1256 Contract

Under section 1256(d), you can elect to
have the mark-to-market rules not apply
to section 1256 contracts that are part
of a mixed straddle. A mixed straddle is
any straddle in which at least one but
not all of the positions is a section 1256
contract. On the day the first section
1256 contract forming part of the
straddle is acquired, each position
forming part of the straddle must be
clearly identified as being part of such
straddle. If you make this election, it will
apply for all later years and cannot be
revoked without IRS consent. If you are
making or have previously made this
election, check box A and report the
section 1256 component in Part II
instead of Part I.

Purpose of Form
Use Form 6781 to report:
● Any gain or loss on section 1256
contracts under the mark-to-market
rules, and
● Gains

A section 1256 contract is any:
● Regulated futures contract,
● Foreign currency contract,
● Nonequity option,
● Dealer equity option, or
● Dealer securities futures contract.
For definitions of these terms and
more details, see section 1256(g) and
Pub. 550.

2

the due date (without extensions) of your
2009 tax return. To make this election,
check box C and attach to your return
(or your request for an extension of time
to file) the statement required by the
regulations. Report the annual account
net gain or loss from a mixed straddle
account in Part II and identify the
election. See Temporary Regulations
section 1.1092(b)-4T(c)(4) for limits on
the total annual account net gain or loss.
Note. If you did not make any of the
above elections and you have a loss on
the section 1256 component, use Part II
to reduce the loss by any unrecognized
gain on the non-section 1256
component before making an entry in
Part I. You also must reduce the loss
from any section 1256 component of a
straddle that would be a mixed straddle
if the positions had been properly
identified as such.

Box D. Net Section 1256
Contracts Loss Election
If you have a net section 1256 contracts
loss for 2009, you can elect to carry it
back 3 years. Corporations,
partnerships, estates, and trusts are not
eligible to make this election. Your net
section 1256 contracts loss is the
smaller of:

DRAFT AS OF
April 24, 2009

Special rules apply to certain foreign
currency contracts. See section 988 and
Regulations sections 1.988-1(a)(7) and
1.988-3. If an election is made under
section 988(a)(1)(B) or 988(c)(1)(D), attach
to your return a list of the contracts
covered by the election(s). On the
attachment, show the net gain or loss
reported from those contracts and
identify where the gain or loss is
reported on the return. If an election is
made under section 988(a)(1)(B), report
on Form 6781 the gains and losses from
section 1256 contracts that are also
section 988 transactions.
Options and commodities dealers
must take any gain or loss from the
trading of section 1256 contracts into
account in figuring net earnings subject
to self-employment tax. See section
1402(i).

Mark-To-Market Rules
Under these rules, each section 1256
contract held at year end is treated as if
it were sold at fair market value (FMV)
on the last business day of the tax year.
The wash sale rules do not apply.
Gains or losses on section 1256
contracts open at the end of the year, or
terminated during the year, are treated
as 60% long term and 40% short term,
regardless of how long the contracts
were held.

Straddle
A straddle means offsetting positions
with respect to personal property of a
type that is actively traded.

Box B. Straddle-By-Straddle
Identification Election

Make this election for mixed straddles
according to Temporary Regulations
section 1.1092(b)-3T(d) by clearly
identifying each position by the earlier of
(a) the close of the day the identified
mixed straddle is established or (b) the
time the position is disposed of. No
straddle-by-straddle identification
election may be made for any straddle
for which a mixed straddle election was
made or if one or more positions are
includible in a mixed straddle account. If
you are making or have previously made
this election, check box B.

If the net gain or loss is attributable to
a net non-section 1256 position, then
the net gain or loss is treated as a shortterm capital gain or loss. Enter it directly
on Schedule D and identify the election.
If the net gain or loss is attributable to a
section 1256 position, enter the gain or
loss in Part I of Form 6781 and identify
the election.

Box C. Mixed Straddle
Account Election
Make this election according to
Temporary Regulations section
1.1092(b)-4T(f) to establish one or more
mixed straddle accounts for 2010, by

excess of your losses from section
1256 contracts over the total of (a) your
gains from section 1256 contracts plus
(b) $3,000 ($1,500 if married filing
separately), or

● The

● The

total you would figure as your
short-term and long-term capital loss
carryovers to 2010 if line 6 of Form 6781
were zero. Use a separate Schedule D
(Form 1040) and Capital Loss Carryover
Worksheet (in Pub. 550) to figure this
amount.
The amount you can carry back to any
prior year is limited to the smaller of:

● The

gain, if any, that you would report
on line 16 of Schedule D for that
carryback year if only gains and losses
from section 1256 contracts were taken
into account, or

● The

gain, if any, reported on line 16 of
Schedule D for that carryback year.
The amounts just described are
figured prior to any carryback from the
loss year. Also, the carryback is allowed
only to the extent it does not increase or
produce a net operating loss for the
carryback year. The loss is carried to the
earliest year first.
Make the election by checking box D
and entering the amount to be carried
back on line 6. To carry your loss back,
file Form 1045, Application for Tentative
Refund, or an amended return. Attach an
amended Form 6781 and an amended
Schedule D for the applicable years.

Version A, Cycle 1
Form 6781 (2009)

Page

On the amended Forms 6781 for the
years to which the loss is carried back,
report the carryback on line 1 of that
year’s amended Form 6781. Enter “Net
section 1256 contracts loss carried back
from” and the tax year in column (a), and
enter the amount of the loss carried
back in column (b).

Specific Instructions
Part I
Line 1
Include on line 1 all gains and losses
from section 1256 contracts open at the
end of your tax year or closed out during
the year. If you received a Form 1099-B,
Proceeds From Broker and Barter
Exchange Transactions, or equivalent
statement, include on line 1 the amount
from box 11 of each form. In column (a),
write “Form 1099-B” and the broker’s
name. List separately each transaction
for which you did not receive a Form
1099-B or equivalent statement, or
received a Form 1099-B that is not for
your tax year.
If you are completing an amended
2009 Form 6781 to carry back a net
section 1256 contracts loss from 2010 or
a later year, report the carryback on line
1. Enter “Net section 1256 contracts loss
carried back from” and the tax year in
column (a), and enter the amount of the
loss carried back to 2009 in column (b).
See the instructions for Box D for
details.

Line 4

regulated futures part of a hedging
transaction. The gain or loss on a
hedging transaction is treated as
ordinary income or loss. See Pub. 550
for details.

Line 5
Partnerships enter the amount from line
5 on Form 1065, Schedule K, line 11.
Electing large partnerships enter the
amount from line 5 on Form 1065-B, Part
II, line 5. S corporations enter the
amount from line 5 on Form 1120S,
Schedule K, line 10. Lines 6 through 9 in
Part I of Form 6781 do not apply to
partnerships or S corporations and are
left blank.

Line 6

●A

loss position included in an identified
straddle established before October 22,
2004, unless you disposed of all of the
positions making up the straddle.

●A

loss position included in an identified
straddle established after October 21,
2004.

●A

position that is part of a straddle if all
of the positions of the straddle are
section 1256 contracts.

Column (a)
Enter the property and delivery date,
and indicate whether the property is a
long or short position.

Column (d)

See the instructions for Box D.

For positions closed out or sold, enter
the closing price or sales price.

Line 8

Column (e)

Include this amount on Schedule D
(Form 1040), line 4; or on Schedule D
(Form 1041), line 2; or as a short-term
capital gain or (loss) on the Schedule D
for your return and enter “Form 6781,
Part I” in column (a) of that Schedule D.

For positions closed out or sold, enter
the cost or other basis plus
commissions paid. Include
nondeductible interest and carrying
charges allocable to personal property
that is part of a straddle. If any part of
an unallowed loss from an offsetting
position established in an identified
straddle after October 21, 2004,
increased your basis in the position, also
include that amount. See Pub. 550 for
details.

Line 9

DRAFT AS OF
April 24, 2009

If the Form 1099-B you received
includes a straddle or hedging
transaction (as defined in section
1256(e)(2)), you may need to make
certain adjustments listed below. Attach
a schedule listing each of these
adjustments and enter the total(s) on
line 4.
● The

regulated futures part of a mixed
straddle, if you made any of the mixed
straddle elections.

● The

● The

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amount of the loss, if you did not
make any of the mixed straddle
elections or the straddle was not
identified as a mixed straddle and you
had a loss on the regulated futures part
that was less than the unrecognized gain
on the nonregulated futures part. If the
unrecognized gain is less than the loss,
enter the unrecognized gain. Use Part I
for a loss on the disposition of one or
more positions that are part of a mixed
straddle and that are non-section 1256
positions if no disposition of a nonsection 1256 position in the straddle
would be a long-term capital gain or
loss, and the disposition of one or more
section 1256 positions in the straddle
would be a capital gain or loss.

Include this amount on Schedule D
(Form 1040), line 11; or on Schedule D
(Form 1041), line 7; or as a long-term
capital gain or (loss) on the Schedule D
for your return and enter “Form 6781,
Part I” in column (a) of that Schedule D.

Part II

Use Section A for losses from positions
that are part of a straddle. Generally, a
loss is allowed to the extent it exceeds
the unrecognized gain on offsetting
positions. The part of the loss not
allowed is treated as if incurred in the
following year and is allowed to the
same extent. However, a loss from a
position established in an identified
straddle after October 21, 2004, is not
allowed. Instead, the basis of each
offsetting position in the identified
straddle that has unrecognized gain is
increased by the amount of the
unallowed loss multiplied by the
following fraction:
The unrecognized gain (if any) on the
offsetting position

The total unrecognized gain on all positions
that offset the loss position in the identified
straddle.

For more details, see Pub. 550,
chapter 4.
Use Section B for gains from positions
that are part of a straddle.
Do not include in Part II a disposition
of any of the following.
●A

position that is part of a hedging
transaction.

Line 10, Column (f)
Include in this column any loss not
allowed in the prior year to the extent of
the unrecognized gain.

Line 10, Column (g)
Enter the unrecognized gain on positions
offsetting those in columns (a) through
(f). Figure the amount to enter in this
column by subtracting the cost or other
basis of the offsetting position from the
settlement price of that position as of
the close of the last business day of
your 2009 tax year.

Lines 11 and 13
Separate recognized gains and losses
into short-term and long-term. Attach a
separate schedule. For information
about holding periods for straddle
positions, see Pub. 550 and Temporary
Regulations section 1.1092(b)-2T. Attach
separate schedules for (a) section 988
contracts that are part of a mixed
straddle and (b) any gain on the
disposition or other termination of any
position held as part of a conversion
transaction (as defined in section
1258(c)). Identify the net gain or loss and
report it on Form 4797, line 10.

Version A, Cycle 1
Form 6781 (2009)

Page

Line 11a
Include this amount on Schedule D
(Form 1040), line 4; or on Schedule D
(Form 1041), line 2; or as a short-term
capital loss on the Schedule D for your
return and enter “Form 6781, Part II” in
column (a) of that Schedule D.

Line 11b
Include this amount on Schedule D
(Form 1040), line 11; or on Schedule D
(Form 1041), line 7; or as a long-term
capital loss on the Schedule D for your
return and enter “Form 6781, Part II” in
column (a) of that Schedule D.

Line 13a
Include this amount on Schedule D
(Form 1040), line 4; or on Schedule D
(Form 1041), line 2; or as a short-term
capital gain on the Schedule D for your
return and enter “Form 6781, Part II” in
column (a) of that Schedule D.

Line 13b
Include this amount on Schedule D
(Form 1040), line 11; or on Schedule D
(Form 1041), line 7; or as a long-term
capital gain on the Schedule D for your
return and enter “Form 6781, Part II” in
column (a) of that Schedule D.

If any of the gain or loss you reported
in Part II is a collectibles gain or (loss)
and you are filing Form 1040 or Form
1041, follow the instructions below for
the form you file.
Form 1040. If you checked “Yes” on
line 17 of Schedule D (Form 1040),
include the collectibles gain or (loss)
from Part II on line 3 of the 28% Rate
Gain Worksheet in the Instructions for
Schedule D (Form 1040).
Form 1041. If you must complete the
28% Rate Gain Worksheet in the
Instructions for Form 1041 and
Schedules A, B, D, G, I, J, and K-1,
include the collectibles gain or (loss)
from Part II on line 3 of that worksheet.

Part III
Complete Part III by listing each position
(whether or not part of a straddle) that
you held at the end of the tax year
(including any position you are treated
as holding because it is held by a
related party) if the FMV of the position
at such time exceeds your cost or other
basis as adjusted.
Do not include positions that are part
of an identified straddle or hedging
transaction, property that is stock in
trade or inventory, or property subject to
depreciation used in a trade or business.

Paperwork Reduction Act Notice. We
ask for the information on this form to
carry out the Internal Revenue laws of
the United States. You are required to
give us the information. We need it to
ensure that you are complying with
these laws and to allow us to figure and
collect the right amount of tax.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records
relating to a form or its instructions must
be retained as long as their contents
may become material in the
administration of any Internal Revenue
law. Generally, tax returns and return
information are confidential, as required
by section 6103.
The time needed to complete and file
this form will vary depending on
individual circumstances. The estimated
burden for individual taxpayers filing this
form is approved under OMB control
number 1545-0074 and is included in
the estimates shown in the instructions
for their individual income tax return. The
estimated burden for all other taxpayers
who file this form is shown below.

DRAFT AS OF
April 24, 2009

Collectibles gain or (loss). A
collectibles gain or (loss) is any longterm gain or deductible long-term loss
from the sale or exchange of a
collectible that is a capital asset.
Collectibles include works of art, rugs,
antiques, metals (such as gold, silver,
and platinum bullion), gems, stamps,
coins, alcoholic beverages, and certain
other tangible property.

Do not complete Part III if you do not
have a recognized loss on any position
(including regulated futures contracts).

4

Recordkeeping . .
Learning about the
law or the form . .
Preparing the form

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10 hr., 31 min.

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1 hr., 57 min.
. 3 hr., 9 min.

Copying, assembling,
and sending the form
to the IRS . . . . . . . . 16 min.
If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form
simpler, we would be happy to hear
from you. See the instructions for the tax
return with which this form is filed.