6781 Gains and Losses From Section 1256 Contracts and Straddl

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Form

6781

Gains and Losses From Section 1256
Contracts and Straddles

OMB No. 1545-0644

2023

Attach to your tax return.
Go to www.irs.gov/Form6781 for the latest information.

Department of the Treasury
Internal Revenue Service

Attachment
Sequence No.

A
B

Check all applicable boxes.
See instructions.

Part I

2
3
4
5

C
D

Mixed straddle election
Straddle-by-straddle identification election

Mixed straddle account election
Net section 1256 contracts loss election

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Section 1256 Contracts Marked to Market
(a) Identification of account

1

82

Identifying number

Name(s) shown on tax return

(b) (Loss)

(c) Gain

)
Add the amounts on line 1 in columns (b) and (c) . . . . . .
2 (
Net gain or (loss). Combine line 2, columns (b) and (c) . . . . . . . . . . . . . . . .
3
Form 1099-B adjustments. See instructions and attach statement . . . . . . . . . . . .
4
Combine lines 3 and 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
If you have a net section 1256 contracts loss and checked box D above, enter the amount of loss to
6
be carried back. Enter the loss as a positive number. If you didn’t check box D, enter -0- . . . .
7
Combine lines 5 and 6 . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Short-term capital gain or (loss). Multiply line 7 by 40% (0.40). Enter here and include on line 4 of
8
Schedule D or on Form 8949. See instructions . . . . . . . . . . . . . . . . . . .
8
9
Long-term capital gain or (loss). Multiply line 7 by 60% (0.60). Enter here and include on line 11 of
Schedule D or on Form 8949. See instructions
. . . . . . . . . . . . . . . . . .
9
Part II
Gains and Losses From Straddles. Attach a separate statement listing each straddle and its components.

Section A—Losses From Straddles
(a) Description of property

10

(b) Date
(c) Date
entered into closed out
or acquired
or sold

(d) Gross
sales price

(e) Cost or
other basis
plus expense
of sale

(f) Loss.
(g)
(h) Recognized loss.
If column (e) is
Unrecognized
If column (f) is
more than (d),
gain on
more than (g),
enter difference.
offsetting
enter difference.
Otherwise,
positions
Otherwise, enter -0-.
enter -0-.

11a

Enter the short-term portion of losses from line 10, column (h), here and include on line 4 of Schedule
D or on Form 8949. See instructions . . . . . . . . . . . . . . . . . . . . . .
b Enter the long-term portion of losses from line 10, column (h), here and include on line 11 of Schedule
D or on Form 8949. See instructions . . . . . . . . . . . . . . . . . . . . . .

11a (

)

11b (

)

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

(b) Date
(c) Date
entered into closed out
or acquired
or sold

(d) Gross
sales price

(e) Cost or
other basis
plus expense
of sale

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

12
13a

Enter the short-term portion of gains from line 12, column (f), here and include on line 4 of Schedule D
or on Form 8949. See instructions . . . . . . . . . . . . . . . . . . . . . . .
13a
b Enter the long-term portion of gains from line 12, column (f), here and include on line 11 of Schedule
D or on Form 8949. 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

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Cat. No. 13715G

Form 6781 (2023)

Page 2

Form 6781 (2023)

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

Future Developments
For the latest information about
developments related to Form 6781 and
its instructions, such as legislation
enacted after they were published, go to
www.irs.gov/Form6781.

account in figuring net earnings subject
to self-employment tax. See section
1402(i).

Mark-to-Market Rules

General Instructions

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 don’t apply.
If your section 1256 contracts produce
capital gain or loss, 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.
The mark-to-market rules don’t apply
if you properly and timely identified a
section 1256 contract as a hedge.

Purpose of Form

Straddle

Use Form 6781 to report:
• Any capital gain or loss on section
1256 contracts under the mark-tomarket rules, and
• Gains and losses under section 1092
from straddle positions.
For details on section 1256 contracts
and straddles, see Pub. 550, Investment
Income and Expenses.

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 you make this election, any positions
you held on the day before the election
are deemed sold for their FMV at the
close of the last business day before the
day of the election. For elections made
on or before August 18, 2014, take this
gain or loss into account when
computing taxable income for the year in
which the election was made. For
elections made after August 18, 2014,
take this gain or loss into account in the
year you would have reported the gain or
loss if the identified mixed straddle had
not been established. In addition, when
the gain or loss that accrued prior to the
time the identified mixed straddle was
established is taken into account, it will
have the same character it would have
had if the identified mixed straddle had
not been established. See Regulations
section 1.1092(b)-6 for details.
Each year you hold positions subject
to this election, you must mark to market
your section 1256 contracts and
determine, in accordance with
Regulations sections 1.1092(b)-3T and
1.1092(b)-6, whether you have a net gain
or loss. 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 short-term capital gain or
loss. Enter it directly on Form 8949 and
identify the election. If the net gain or
loss is attributable to a section 1256
position, enter the gain or loss on Form
6781, Part I, and identify the election.

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Reminder

Qualified Opportunity Investment
If you held a qualified investment in a
qualified opportunity fund (QOF) at any
time during the year, you must file your
return with Form 8997. See the
Instructions for Form 8997.

Section 1256 Contract

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.
A section 1256 contract doesn’t
include any securities future contract,
option on a securities future contract,
interest rate swap, currency swap, basis
swap, commodity swap, equity swap,
equity index swap, credit default swap,
interest rate cap, interest rate floor, or
similar agreement.
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

Offsetting 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 won’t be treated as offsetting
with respect to any position that is part
of the identified straddle.

General Rule for Straddles

If you don’t make any of the elections
described in box A, B, or C, and you
have a loss on the section 1256 contract
component, use Part II to reduce the
loss by any unrecognized gain on the
non-section 1256 contract component
before making an entry in Part I. You
must also reduce the loss from any
section 1256 contract component of a
straddle that would be a mixed straddle
if the positions had been properly
identified as such.

Box A. Mixed Straddle Election
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 you can’t
revoke it without IRS consent. If you are
making or have previously made this
election, check box A and report the
section 1256 contract component in
Part II instead of in Part I.

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 2024 by the
due date (without extensions) of your
2023 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.

Page 3

Form 6781 (2023)

Box D. Net Section 1256 Contracts
Loss Election
If you have a net section 1256 contracts
loss for 2023, 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:
• The 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 total you would figure as your
short-term and long-term capital loss
carryovers to 2024 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 (Form 1040) 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 (Form 1040) 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 doesn’t 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 (Form 1040) for the
applicable years.
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).

broker’s name. List separately each
transaction for which you didn’t receive
a Form 1099-B or substitute statement,
or received a Form 1099-B that isn’t for
your tax year.
If you are completing an amended
2023 Form 6781 to carry back a net
section 1256 contracts loss from 2024 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 2023 in column (b).
See the instructions for box D for details.

include this amount on Schedule D
(Form 1040), line 4; or on Schedule D
(Form 1041), line 4. If you are deferring
any of this amount due to an investment
in a QOF, follow the instructions in the
next paragraph.
For other returns, enter it in Part I of a
Form 8949 with box B checked (if you
received a Form 1099-B or substitute
statement for every transaction included
on line 1) or box C checked (if you can’t
check box B). Enter “Form 6781, Part I”
on line 1 in column (a). Enter the gain or
(loss) in column (h). Leave all other
columns blank.

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Specific Instructions
Part I
Line 1
Include on line 1 all capital 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
substitute statement, include on line 1
the amount from box 11 of each form. In
column (a), enter “Form 1099-B” and the

Line 4

For information about how to
elect to defer capital gain net
income because you invested
CAUTION in a QOF, see the Instructions
for Form 8949. Don’t use line 4 to show
the adjustment for a QOF-related
deferral.
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
next. Attach a statement listing each of
these adjustments and enter the total(s)
on line 4.
• The section 1256 contract part of a
mixed straddle, if you made any of the
mixed straddle elections.
• The amount of the loss, if you didn’t
make any of the mixed straddle elections
or the straddle wasn’t identified as a
mixed straddle and you had a loss on
the section 1256 contract part that was
less than the unrecognized gain on the
non-section 1256 contract 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.
• The section 1256 contract 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.
S corporations enter the amount from
line 5 on Form 1120-S, Schedule K, line
10. Lines 6 through 9 on Form 6781,
Part I, don’t apply to partnerships or S
corporations and are left blank.

Line 6
See the instructions for box D.

Line 8
If you are not deferring any of this
amount due to an investment in a QOF,

Line 9

If you are not deferring any of this
amount due to an investment in a QOF,
include this amount on Schedule D
(Form 1040), line 11; or on Schedule D
(Form 1041), line 11. If you are deferring
any of this amount due to an investment
in a QOF, follow the instructions in the
next paragraph.
For other returns, enter it in Part II of a
Form 8949 with box E checked (if you
received a Form 1099-B or substitute
statement for every transaction included
on line 1) or box F checked (if you can’t
check box E). Enter “Form 6781, Part I”
on line 1 in column (a). Enter the gain or
(loss) in column (h). Leave all other
columns blank.
If you held a qualified
investment in a QOF at any
time during the year, you must
CAUTION file your return with Form
8997. See the Instructions for Form 8997
for more information.

!

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, isn’t
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 chapter 4 of
Pub. 550.
Use Section B for gains from positions
that are part of a straddle.

Page 4

Form 6781 (2023)

Don’t include in Part II a disposition of
any of the following.
• A position that is part of a hedging
transaction.
• 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.

Line 11a
Include this amount on Schedule D
(Form 1040), line 4; or on Schedule D
(Form 1041), line 4.
For other returns, enter it in Part I of a
Form 8949 with box C checked. Enter
“Form 6781, Part II” on line 1 in column
(a). Enter the (loss) as a negative number
(in parentheses) in column (h). Leave all
other columns blank.

Form 1041. If you must complete the
28% Rate Gain Worksheet in the
Instructions for Schedule D (Form 1041),
include the collectibles gain or (loss)
from Part II on line 3 of that worksheet.

Part III

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Line 10, Column (a)

Enter the property and delivery date and
indicate whether the property is a long or
short position.

Line 10, Column (d)

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

Line 11b

Include this amount on Schedule D
(Form 1040), line 11; or on Schedule D
(Form 1041), line 11.
For other returns, enter it in Part II of a
Form 8949 with box F checked. Enter
“Form 6781, Part II” on line 1 in column
(a). Enter the (loss) as a negative number
(in parentheses) in column (h). Leave all
other columns blank.

Line 13a

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.

If you are not deferring any of this
amount due to an investment in a QOF,
include this amount on Schedule D
(Form 1040), line 4; or on Schedule D
(Form 1041), line 4. If you are deferring
any of this amount due to an investment
in a QOF, follow the instructions in the
next paragraph.
For other returns, enter it in Part I of a
Form 8949 with box C checked. Enter
“Form 6781, Part II” on line 1 in column
(a). Enter the gain in column (h). Leave all
other columns blank.

Line 10, Column (f)

Line 13b

Include in this column any loss not
allowed in the prior year to the extent of
the unrecognized gain.

If you are not deferring any of this amount
due to an investment in a QOF, include
this amount on Schedule D (Form 1040),
line 11; or on Schedule D (Form 1041), line
11. If you are deferring any of this amount
due to an investment in a QOF, follow the
instructions in the next paragraph.
For other returns, enter it in Part II of a
Form 8949 with box F checked. Enter
“Form 6781, Part II” on line 1 in column
(a). Enter the gain in column (h). Leave all
other columns blank.
Collectibles gain or (loss). A collectibles
gain or (loss) is any long-term 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.
If any of the gain or loss you reported
in Part II is a collectibles gain or (loss)
and you are filing Form 1040, 1040-SR,
or 1041, follow the instructions below for
the form you file.
Form 1040 or 1040-SR. 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).

Line 10, Column (e)

Line 10, Column (g)
Enter the unrecognized gain on positions
offsetting those in columns (a) through
(f). Include unrecognized gain on any
position you are treated as holding
because it is held by a related party.
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
2023 tax year.

Lines 11 and 13
Separate recognized gains and losses
into short term and long term. Attach a
separate statement for each. For
information about holding periods for
straddle positions, see Pub. 550 and
Temporary Regulations section
1.1092(b)-2T.
Attach separate statements 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.

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.
Don’t 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.
Don’t complete Part III if you don’t
have a recognized loss on any position
(including section 1256 contracts).

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