Form 6781 - Gains And Losses From Section 1256 Contracts And Straddles - 2012 Page 2
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Form 6781 (2012)
Page
Future Developments
Mark-to-Market Rules
If the net gain or loss is attributable to
a net non-section 1256 position, then
Under these rules, each section 1256
For the latest information about
the net gain or loss is treated as a
contract held at year end is treated as if
developments related to Form 6781 and
short-term capital gain or loss. Enter it
it were sold at fair market value (FMV)
its instructions, such as legislation
directly on Form 8949 and identify the
on the last business day of the tax year.
enacted after they were published, go to
election. If the net gain or loss is
The wash sale rules do not apply.
attributable to a section 1256 position,
enter the gain or loss in Part I of Form
Gains or losses on section 1256
General Instructions
6781 and identify the election.
contracts open at the end of the year, or
terminated during the year, are treated
Section references are to the Internal
Box C. Mixed Straddle
as 60% long term and 40% short term,
Revenue Code unless otherwise noted.
Account Election
regardless of how long the contracts
Purpose of Form
were held.
Make this election according to
Straddle
Temporary Regulations section
Use Form 6781 to report:
1.1092(b)-4T(f) to establish one or more
• Any gain or loss on section 1256
A straddle means offsetting positions
mixed straddle accounts for 2013 by the
contracts under the mark-to-market
with respect to personal property of a
due date (without extensions) of your
rules, and
type that is actively traded.
2012 tax return. To make this election,
• Gains and losses under section 1092
check box C and attach to your return
Offsetting Positions
from straddle positions.
(or your request for an extension of time
If there is a substantial decrease in risk
to file) the statement required by the
For details on section 1256 contracts
of loss to a taxpayer holding a position
regulations. Report the annual account
and straddles, see Pub. 550, Investment
because that taxpayer or a related party
net gain or loss from a mixed straddle
Income and Expenses.
also holds one or more other positions,
account in Part II and identify the
Section 1256 Contract
then those positions are offsetting and
election. See Temporary Regulations
may be part of a straddle. However, if an
section 1.1092(b)-4T(c)(4) for limits on
A section 1256 contract is any:
identified straddle is properly
the total annual account net gain or loss.
• Regulated futures contract,
established, other positions held by the
Note. If you did not make any of the
taxpayer will not be treated as offsetting
• Foreign currency contract,
above elections and you have a loss on
with respect to any position which is
the section 1256 component, use Part II
• Nonequity option,
part of the identified straddle.
to reduce the loss by any unrecognized
• Dealer equity option, or
gain on the non-section 1256
Box A. Mixed Straddle
component before making an entry in
• Dealer securities futures contract.
Election
Part I. You also must reduce the loss
For definitions of these terms and
from any section 1256 component of a
Under section 1256(d), you can elect to
more details, see section 1256(g) and
straddle that would be a mixed straddle
have the mark-to-market rules not apply
Pub. 550.
if the positions had been properly
to section 1256 contracts that are part
identified as such.
Note. A section 1256 contract does not
of a mixed straddle. A mixed straddle is
include any interest rate swap, currency
any straddle in which at least one but
Box D. Net Section 1256
swap, basis swap, commodity swap,
not all of the positions is a section 1256
Contracts Loss Election
equity swap, equity index swap, credit
contract. On the day the first section
default swap, interest rate cap, interest
1256 contract forming part of the
If you have a net section 1256 contracts
rate floor, or similar agreement.
straddle is acquired, each position
loss for 2012, you can elect to carry it
forming part of the straddle must be
Special rules apply to certain foreign
back 3 years. Corporations,
clearly identified as being part of such
currency contracts. See section 988 and
partnerships, estates, and trusts are not
straddle. If you make this election, it will
Regulations sections 1.988-1(a)(7) and
eligible to make this election. Your net
apply for all later years and cannot be
1.988-3. If an election is made under
section 1256 contracts loss is the
revoked without IRS consent. If you are
section 988(a)(1)(B) or 988(c)(1)(D), attach
smaller of:
making or have previously made this
to your return a list of the contracts
• The excess of your losses from
election, check box A and report the
covered by the election(s). On the
section 1256 contracts over the total of
section 1256 component in Part II
attachment, show the net gain or loss
(a) your gains from section 1256
instead of Part I.
reported from those contracts and
contracts plus (b) $3,000 ($1,500 if
identify where the gain or loss is
Box B. Straddle-By-Straddle
married filing separately), or
reported on the return. If an election is
Identification Election
made under section 988(a)(1)(B), report
• The total you would figure as your
on Form 6781 the gains and losses from
short-term and long-term capital loss
Make this election for mixed straddles
section 1256 contracts that are also
carryovers to 2013 if line 6 of Form 6781
according to Temporary Regulations
section 988 transactions.
were zero. Use a separate Schedule D
section 1.1092(b)-3T(d) by clearly
(Form 1040) and Capital Loss Carryover
Options and commodities dealers
identifying each position by the earlier of
Worksheet (in Pub. 550) to figure this
must take any gain or loss from the
(a) the close of the day the identified
amount.
trading of section 1256 contracts into
mixed straddle is established or (b) the
account in figuring net earnings subject
The amount you can carry back to any
time the position is disposed of. No
to self-employment tax. See section
straddle-by-straddle identification
prior year is limited to the smaller of:
1402(i).
election may be made for any straddle
• The gain, if any, that you would report
for which a mixed straddle election was
on line 16 of Schedule D (Form 1040) for
made or if one or more positions are
that carryback year if only gains and
includible in a mixed straddle account. If
losses from section 1256 contracts were
you are making or have previously made
taken into account, or
this election, check box B.
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