. . OMB No. 1545-0644
6781 Gains and Losses From Section 1256 [—
Form Contracts and Straddles 1984
Ree oesewee” D Tobe filed with Form 1040, 1041, 1065, 1120, 11208, etc. 82
Name(s) as shown on tax return Identifying number
A. © Check here if you made the mixed straddle election this year or an earlier year. (See instructions)
B. [1] Check here if you elect to carryback a net section 1256 contracts loss. (See instructions)
C. (1 Other elections (see instructions) _ 2.22.22 ee ee eee eee eee ee eee eee reece eeeeeeeees
Section 1256 Contracts Marked to Market
2. Identification of account b. LOSS ¢. GAIN
1
2 Addcolumn band columnc, line 1 . : .K )
3 > Combine columns b and c of line 2 and enter the net gain or or (loss) .
4 Form 1099-B adjustments (see instructions, attach schedule) .
5 Combine lines3and4 . :
6 If you have a net section 1256 contracts loss and checked box 8, 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 g gain or ‘(loss) on Schedule D, Part | Identify as Form 6781,
Part |
9 Multiply line 7 byé 60%. Enter as asa longte term capital gain or (oss) 0 on Schedule D, Part MW identity a as s Form 6781,
Part | . .
Gains and Losses From Straddles (Attach a separate schedule listing each straddle and its components.)
Section A.—Losses From Straddles
f. LOSS h. Recognized
e. Cost or ifcolumn eis g. Unrecognized | 98s. Ireolumn
Description of property acqures | €Datesold | Sispace | piusespense | emeratternce, | eHmanofeetting | orteraiterncs,
of sale Otherwise, enter positions. Otherwise, enter
zero. zero.
10
1la_ Enter short-term portion of line 10, column h here and on Schedule D, Part |. Identify as Form 6781, Part Il . ¢ )
b Enter long-term portion of line 10, column h here and on Schedule D, Part Il. Identify as Form 6781, Part Il . ( )
Section B.—Gains From Straddies
; 1.GAIN
«3. Description of property acquires | © Datesold 4. Gross sales price Siusexpensectaate | enerdMerencs: Oterwise,
. enter zero.
12

13a Enter short-term portion of line 12, column f here and on Schedule D, Part |. Identify as Form 6781, Part Il.
f here and on Schedule D, Part Il. Identify as Form 6781, Part Il.

b Enter long-term portion of line 12, column

Unrecognized Gains From Positions Held on Last Day of Tax Year (Memo Entry Only—See Instructions)

‘a. Description of property

b. Date
acquired

. Fair market value on last
business day of tax year

e. UNRECOGNIZED GAIN
d. Cost or other basis if column c is more

as adjusted than d, enter difference.
Otherwise, enter zero.

14

For Paperwork Reduction Act Notice, see back of form.

Form 6781 (1984)


Instructions

(Section references are to the Internal
Revenue Code.)

Paperwork Reduction Act Notice.—We ask
for this information to carry out the Internal
Revenue laws of the United States. We need it
to ensure that taxpayers are complying with
these laws and to allow us to figure and collect
the right amount of tax. You are required to
give us this information.

Purpose of Form.—Form 6781 is to be used
by individuals, partnerships, fiduciaries,
corporations, etc., that held section 1256
contracts or straddles.

Do not use Form 6781 to report hedging
transactions, as defined in section 1256(e).
Report them directly on your tax return. Any
gain or loss on a hedging transaction is treated
as ordinary income or loss. For limitation on
losses from hedging transactions see section
1256(e)(5).

Traders in section 1256 contracts, see
section 1256(#)(3) for positions established
after July 18, 1984.

Elections.—

Mixed straddle election.—You may elect not
to have the marked to market rules apply to
section 1256 contracts that are part of a
mixed straddle. A mixed straddle is any
straddle, at least one (but not all) of the
Positions of which 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 made this election, it will apply
for all later years as well. It cannot be revoked
without the consent of the Commissioner. If
you made this election, check box A and report
the section 1256 component in Part Il instead
of Part |.

If you did not make this election, 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 |.
You must also reduce the loss from any
section 1256 component of a straddle which
would be a mixed straddle if the positions had
been properly identified as such.

Attach a computation and indicate in the
property description if the contract is part of a
mixed straddle.

You also may elect to offset gains and
losses from positions that are part of a mixed
straddle by establishing a mixed straddle
account or by straddle-by-straddle
identification. For more information, see
section 1092(b)(2).

Net section 1256 contracts loss election. —
An individual or partnership having a net
section 1256 contracts loss for 1984 may
elect to carry it back three years. The amount
which 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 definition of net section 1256
contracts loss and net section 1256 contracts
gain. Make the election by checking box B and
entering the amount to be carried back in line
6. To carry your loss back, file an amended
Form 6781 for the applicable year, together
with a Form 1040X or amended return.

Other elections.—Check box C if you are
making an election under section 102(g)(1),
or section 102(g)(2) of Public Law 98-369.
Further, if you elected under section
102(g)(2), you may make an election under
section 102(h) of Public Law 98-369. Indicate

in the space next to box C, which section(s)
you are electing. In addition, if you are making
an election under section 102(h), also include
in that space the amount of tax to be paid in
installments, and the number of installments.
Also attach to Form 6781, a computation of
the tax to be paid in installments.

Enter the deferred tax from that
computation in the margin of your tax return
next to the balance due amount. Write
“Deferred tax from Form 6781.” In paying
your tax for 1984, reduce the balance due
(but not below zero) by the deferred tax.

Part!

Asection 1256 contract is (1) any regulated
futures contract, (2) any foreign currency
contract, (3) any nonequity option, and (4) any
dealer equity option.

Aregulated futures contract is a contract for
which the amount required to be deposited or
withdrawn depends on a system of marking to
market, and is traded on or subject to the rules
of a qualified board or exchange.

For definitions of qualified board or
exchange, foreign currency contract,
nonequity option, and dealer equity option,
see section 1256(g).

Positions established with respect to
nonequity options and dealer equity options
before July 19, 1984 were not section 1256
contracts. However, options with respect to
regulated futures contracts established after
10/31/83 are section 1256 contracts. See the
instructions for Other Elections, above.

Include in Part | all section 1256 contracts
open at the end of your tax year or closed out
during the year. If you receive a Form 1099-B
or equivalent statement, enter the amount
from box 9 of each form in columns b or c of
Form 6781, Part |. In column a of Form 6781,
Part | write “Form 1099-B” and identify the
account by writing the broker's name.

On Form 6781, Part], list each transaction
separately for which you do not receive a Form
1099-B or equivalent statement, or if the Form
1099-B is not for your tax year. Describe each
transaction in column a.

Line 4.— If the Form 1099-B you receive
includes a straddle or hedging transaction, it
may be necessary to make certain
adjustments listed in (a) through (c) below.
Attach a schedule listing each adjustment and
enter the total on line 4.

(a) Enter the regulated futures part of a mix-
ed straddle if you made the mixed straddle
election.

(b) If you did not make the mixed straddle
election or the straddle wasn't identified as a
mixed straddle and you had a loss on the
regulated futures part which was less than the
unrecognized gain on the non-regulated
futures part, enter the amount of the loss. If
the unrecognized gain is less than the loss,
enter the unrecognized gain.

(c) Enter the regulated futures part ofa
hedging transaction.

Part Il

Attach a separate schedule listing each
straddle and its component positions. If it is an
identified or mixed straddle, indicate this on
the schedule.

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.

Use section B for gains from positions that
are part of a straddle.

US, Government Printing Office: 1984—423-290 23-0916750

Do not include in Part Il, positions that are
part of an identified straddle if all of the
positions are open at the end of the year. If
you closed the entire identified straddle or any
positions of the straddle during the tax year,
then include the straddle in Part II. See section
1092(a)(2)(B) for definition of an identified
straddle.

Straddle.—A straddle means offsetting
positions with respect to personal property.
Offsetting positions. —If there is a
substantial decrease in risk of loss toa
taxpayer holding a position because that
taxpayer or a related party also holds one or
more other positions, then those positions are
offsetting. If any position is not part of an
identified straddle, such position can not be
treated as offsetting any position that is part of
an identified straddle.

For further information concerning
exceptions, definitions, related parties, flow
through entities, and specific rules as to the
tax treatment of gains and losses from
straddles, see section 1092.

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

Column b.—Enter the date you entered into
or acquired the position.

Column c.—Enter the date you closed out or
sold the position.

Columns d and e.—For positions sold or
closed out, enter the sales price or closing
price in column d, and the cost or other basis
plus commissions paid in column e. Include in
column e interest and carrying charges
properly allocable to personal property that is
part of a straddle. You cannot deduct these
expenses. See section 263(g) for definition of
interest and carrying charges.

Section A, column f.—Include in this column
any loss not allowed in the prior year to the
extent of the unrecognized gain.

Section A, 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 1984 tax year. Do not
enter less than zero.

Lines 11 and 13.—Separate recognized gains
and losses into short-term and long-term.
Attach a separate schedule.

Part Ill

Section 1092 contains a reporting
requirement. You must complete Part Ill 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.

Do not include the following in Part Ill:

© Positions that are part of an identified
straddle;

© Property that is stock in trade or inventory;

© Positions that are part of a hedging
transaction (as defined in section
1256(e));

© Property used in a trade or business
subject to depreciation.

If you do not have a loss on.any position

(including a regulated futures contract) for the

entire tax year, or your only loss was on a

position listed above, do not complete this

part.