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

Contracts and Straddles Form 6781

Department of the Treasury

Internal Revenue Service

© See instructions on back. Attachment

© Attach to your tax return. Sequence No. 82

Name(s) shown on tax return Identifying number

A Check here if you made the mixed straddle election under section 1256(d) this year or an earlier year.

B Check here if you made the straddle-by-straddle identification election under section 1092(b).

C Check here to make the mixed straddle account election under section 1092(b).

D Check here if you elect to carry back a net section 1256 contracts loss.

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 Multiply line 7 by 40%. Enter as a short-term capital gain or (loss) on Schedule D. Identify as Form 6781, Part I

9 Multiply line 7 by 60%. Enter as a long-term capital gain or (loss) on Schedule D. Identify as Form 6781, Part I

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. Identify as Form 6781, Part II ( )

b Enter long-term portion of line 10, column (h), here and on Schedule D. Identify as Form 6781, Part II ( )

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. Identify as Form 6781, Part II

b Enter long-term portion of line 12, column (f), here and on Schedule D. Identify as Form 6781, Part II

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:

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.

Recordkeeping 10 hr., 17 min.

Learning about the 

law or the form 2 hr., 28 min.

Preparing the form 3 hr., 40 min.

Copying, assembling, and 

sending the form to the IRS 16 min.

Form 6781 (1992)

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
Form 6781 (1992) Page 2

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 1993, by the due date (without

extensions) of your 1992 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.

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 and S corporations and should

be left blank.

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.

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.

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 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.

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.

Net section 1256 contracts loss election.—

If you have a net section 1256 contracts loss

for 1992, 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.

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 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 1992 tax year.

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. For section

988 contracts that are part of a mixed

straddle, attach a separate schedule. Identify

the net gain or loss and state where it is

reported on the tax return.

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

includes a straddle or hedging transaction, 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 non-regulated 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

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.

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.

● Gains and losses under section 1092 from

straddle positions.

Do not report hedging transactions (as

defined in section 1256(e)(2)) on Form 6781.

They are not subject to the marked-to-market

rules.

For more details on section 1256 contracts,

straddles, and hedging transactions, get Pub.

550, Investment Income and Expenses.

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.

loss, and the disposition of one or more

section 1256 positions in the straddle would

be a capital gain or loss.

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.