OMB No. 1545-0644 Gains and Losses From Section 1256

Contracts and Straddles Form 6781

Department of the Treasury

Internal Revenue Service

Attachment

Sequence No. 82 © Attach to your tax return.

Name(s) shown on tax return Identifying number

A Mixed straddle election

B Straddle-by-straddle identification election

C Mixed straddle account election

D Net section 1256 contracts loss election

Section 1256 Contracts Marked to Market

(a) Identification of account (b) LOSS (c) GAIN

1

( ) 2 Add amounts on line 1 in columns (b) and (c)

3 Net gain or (loss). Combine columns (b) and (c) of line 2

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

5 Combine lines 3 and 4. If 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, enter the amount to be carried back

7 Subtract line 6 from line 5

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

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

Gains and Losses From Straddles. Attach a separate schedule listing each straddle and its components.

Section A—Losses From Straddles

(h) RECOGNIZED

LOSS. If column (f)

is more than (g),

enter difference.

Otherwise, enter

-0-.

(f) LOSS 

If column (e) is

more than (d),

enter difference.

Otherwise, enter

-0-.

(e) Cost or

other basis

plus expense

of sale

(g) Unrecognized

gain on offsetting

positions

(c) Date 

closed out

or sold

(b) Date 

entered into or

acquired

(d) Gross

sales price (a) Description of property

10

11a Enter short-term portion of line 10, column (h), here and on Schedule D. See instructions ( )

b Enter long-term portion of line 10, column (h), here and on Schedule D. See instructions ( )

Section B—Gains From Straddles

(f) GAIN 

If column (d) is more than

(e), enter difference.

Otherwise, enter -0-.

12

13a Enter short-term portion of line 12, column (f), here and on Schedule D. See instructions

b Enter long-term portion of line 12, column (f), here and on Schedule D. See instructions

Unrecognized Gains From Positions Held on Last Day of Tax Year. Memo Entry Only—See instructions.

(e) UNRECOGNIZED GAIN

If column (c) is more 

than (d), enter difference.

Otherwise, enter -0-.

(d) Cost or other basis 

as adjusted

(c) Fair market value on last

business day of tax year

14

If you have comments concerning the

accuracy of these time estimates or suggestions

for making this form more simple, we would be

happy to hear from you. You can write to both

the IRS and the Office of Management and

Budget at the addresses listed in the instructions

for the tax return with which this form is filed.

The time needed to complete and file this

form will vary depending on individual

circumstances. The estimated average time is:

Recordkeeping, 10 hr., 17 min.; Learning about

the law or the form, 2 hr., 28 min.; Preparing

Instructions

Section references are to the Internal Revenue

Code unless otherwise noted.

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.

Form 6781 (1993)

Part I

Part II

Part III

(e) Cost or other basis

plus expense of sale

(c) Date 

closed out

or sold

(b) Date 

entered into or

acquired

(a) Description of property (d) Gross sales price

(a) Description of property (b) Date 

acquired

Purpose of Form.—Use Form 6781 to report:

● Any gain or loss on section 1256 contracts

under the marked-to-market rules; and

Cat. No. 13715G

Section 1256 contract.—A section 1256

contract is (a) any regulated futures contract, (b)

any foreign currency contract, (c) any nonequity

option, and (d) any dealer equity option. For

definitions of these terms and more details, see

section 1256(g) and Pub. 550.

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), showing the net gain

or loss reported from those contracts, and

● Gains and losses under section 1092 from

straddle positions.

For more details on section 1256 contracts

and straddles, get Pub. 550, Investment Income

and Expenses.

Check applicable box(es) (see instructions):

the form, 3 hr., 40 min.; Copying, assembling,

and sending the form to the IRS, 16 min.
Form 6781 (1993) Page 2

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 1994,

by the due date (without extensions) of your

1993 tax return. To make this election, check

box C and attach the statement required by the

regulations to your return. 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.

Line 5.—Partnerships enter the amount from line

5 on Form 1065, Schedule K, line 7.

S corporations enter the amount from line 5 on

Form 1120S, Schedule K, line 6. Lines 6 through

9 in Part I do not apply to partnerships or S

corporations and should be left blank.

Part II

Use Section A for losses from positions that are

part of a straddle. A loss is allowed only 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.

If you did not make 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

must also 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.

Use Section B for gains from positions that

are part of a straddle.

Do not include in Part II a disposition of one

or more positions that are part of a hedging

transaction, a disposition of a loss position

included in an identified straddle, and a

disposition of a position that is part of a straddle

if all the positions of the straddle are section

1256 contracts.

Box D. Net section 1256 contracts loss

election.— If you have a net section 1256

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).

Column (a).—Enter the personal property,

delivery date, and indicate whether the property

is a long or short position.

Column (d).—For positions closed out or sold,

enter the closing price or sales price.

Straddle.—A straddle means offsetting positions

with respect to personal property.

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. Any position that

is not part of an identified straddle cannot offset

any position that is part of an identified straddle.

Line 10, column (f).—Include in this column any

loss not allowed in the prior year to the extent of

the unrecognized gain.

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, column

(b) or (c), the amount from box 9 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 if the Form 1099-B you

received is not for your tax year.

Line 10, column (g).—Enter the unrecognized

gain on positions offsetting those in columns (a)

through (f). Figure 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 1993 tax

year.

Box A. Mixed straddle election.—Under section

1256(d), you may elect to have the

marked-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. Each position forming

part of the straddle must be clearly identified, on

the day the first section 1256 contract forming

part of the straddle is acquired, 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.

Lines 11 and 13.—Separate recognized gains

and losses into short-term and long-term. Attach

a separate schedule. For information about the

holding period for straddle positions, see Pub.

550 and Temporary Regulations section

1.1092(b)-2T. Attach a separate schedule 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 state

where you reported it on the tax return.

Line 4.—If the Form 1099-B you received

includes a straddle or hedging transaction (as

defined in section 1256(e)(2)), it may be

necessary to make certain adjustments listed

below. Attach a schedule listing each of these

adjustments and enter the total on line 4:

● The regulated futures part of a mixed straddle

if you made any of the mixed straddle elections.

Part III

● The amount of the loss if you did not make

any of the mixed straddle elections or the

straddle wasn’t 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 the disposition of no non-section 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.

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 settlement price of the

position at such time exceeds your cost or other

basis as adjusted.

Box B. Straddle-by-straddle identification

election.—Make this election 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 in 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.

Do not include positions that are part of an

identified straddle or hedging transaction,

property that is stock in trade or inventory, and

property used in a trade or business subject to

depreciation.

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 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.

Do not complete Part III if you do not have a

recognized loss on any position (including

regulated futures contracts).

● The 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 more details.

Marked-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 on

the last business day of the tax year. Column (e).—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. See Pub. 550 for more details.

Line 8.—Individuals, include the amount from

line 8 on Schedule D (Form 1040), line 4. All

others, enter the amount 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

Schedule D.

Line 9.—Individuals, include the amount from

line 9 on Schedule D (Form 1040), line 12. All

others, enter the amount 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

Schedule D.

Individuals, include the amount from line 11a

on Schedule D (Form 1040), line 4, in column (f).

All others, enter the amount as a short-term

capital loss on the Schedule D for your return

and enter “Form 6781, Part II” in column (a) of

Schedule D.

Individuals, include the amount from line 11b

on Schedule D (Form 1040), line 12, in column

(f). All others, enter the amount as a long-term

capital loss on the Schedule D for your return

and enter “Form 6781, Part II” in column (a) of

Schedule D.

Individuals, include the amount from line 13a

on Schedule D (Form 1040), line 4, in column (g).

All others, enter the amount as a short-term

capital gain on the Schedule D for your return

and enter “Form 6781, Part II” in column (a) of

Schedule D.

Individuals, include the amount from line 13b

on Schedule D (Form 1040), line 12, in column

(g). All others, enter the amount as a long-term

capital gain on the Schedule D for your return

and enter “Form 6781, Part II” in column (a) of

Schedule D.

identifying 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.

contracts loss for 1993, you may elect to carry it

back 3 years. The amount that may be carried

back cannot be more than the net section 1256

contracts gain in the year to which the loss is

carried. The loss is carried to the earliest year

first. See section 1212(c) for definitions of net

section 1256 contracts loss and net section

1256 contracts gain. Make the election by

checking box D and entering the amount to be

carried back on line 6. To carry your loss back,

file an amended return, and attach an amended

Form 6781 for the applicable year.

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