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)

1

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

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

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

5 Combine lines 3 and 4

If you have a net section 1256 contracts loss and you checked box D above, enter the amount

to be carried back

6

7 Subtract line 6 from line 5

Short-term capital gain or (loss). Multiply line 7 by 40% (.40). Enter here and include on the

appropriate line of Schedule D (see instructions)

8

Long-term capital gain or (loss). Multiply line 7 by 60% (.60). Enter here and include on the

appropriate line of Schedule D (see instructions)

9

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 the short-term portion of losses from line 10, column (h), here and include

on the appropriate line of Schedule D (see instructions)

( )

Enter the long-term portion of losses from line 10, columns (h) and (i), here and

include on the appropriate line of Schedule D (see instructions)

b

Section B—Gains From Straddles

(f) Gain. If column (d) is

more than (e), enter

difference. Otherwise,

enter -0-

12

Enter the short-term portion of gains from line 12, column (f), here and

include on the appropriate line of Schedule D (see instructions)

13a

b Enter the long-term portion of gains from line 12, columns (f) and (g), here

and include on the appropriate line of 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

Form 6781 (2001)

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

Cat. No. 13715G

Check all applicable boxes (see instructions).

(c) Gain

*(i) 28% rate

loss (see instr.

below)

*(g) 28% rate gain 

(see instr. below)

Note: If line 5 shows a net gain, skip line 6 and enter the gain on line 7. Partnerships and

S corporations, see instructions.

( )

For Paperwork Reduction Act Notice, see page 3.

*28% rate gain or loss includes all “collectibles gains and losses” and up to 50% of the eligible gain on qualified small business stock. See Instructions for Schedule D (Form 1040).

2 ( )

3

4

5

6

7

8

9

13a

11a

11b

13b

2001
Form 6781 (2001) Page 2

Box C. Mixed Straddle

Account Election

Note: If you did not make any of 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

Box D. Net Section 1256

Contracts Loss Election

Offsetting Positions

Part I

Line 1

Box A. Mixed Straddle

Election

Line 4

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.

General Instructions

Section references are to the Internal

Revenue Code unless otherwise noted.

Purpose of Form

● Any gain or loss on section 1256

contracts under the mark-to-market

rules and

Section 1256 Contract

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.

● Gains and losses under section 1092

from straddle positions.

For details on section 1256 contracts

and straddles, see Pub. 550, Investment

Income and Expenses.

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).

Straddle

Mark-To-Market Rules

● The regulated futures part of a mixed

straddle, if you made any of the mixed

straddle elections.

● The amount of the loss, if you did not

make any of the mixed straddle

elections or the straddle was not

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

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.

A straddle means offsetting positions

with respect to personal property of a

type that is actively traded.

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 will not be treated as offsetting

A section1256 contract is any:

For definitions of these terms and

more details, see section 1256(g) and

Pub. 550. Specific Instructions

Use Form 6781 to report:

● Regulated furtures contract,

● Foreign currency contract,

● Nonequity option,

● Dealer equity option, or

Under section 1256(d), you may 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 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.

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.

Box B. Straddle-By-Straddle

Identification Election

Make this election according to

Temporary Regulations section

1.1092(b)-4T(f) to establish one or more

mixed straddle accounts for 2002, by

the due date (without extensions) of your

2001 tax return. To make this election,

check box C and attach to your return

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.

If you have a net section 1256 contracts

loss for 2001, you may elect to carry it

back 3 years. Corporations, estates, and

trusts are not eligible to make this

election. The amount that may be

carried back may not 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.

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

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 received a Form 1099-B that is not

for your tax year.

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 below. Attach

a schedule listing each of these

adjustments and enter the total on

line 4.

component before making an entry in

Part I. You also must 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.

● Dealer securities futures contract.

with respect to any position which is

part of the identified straddle.
Form 6781 (2001) Page 3

Line 5

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.

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, or a disposition of a position

that is part of a straddle if all the

positions of the straddle are section

1256 contracts.

Column (a)

Column (d)

Line 10, Column (f)

Line 10, Column (i) and Line 12,

Column (g)

Lines 11 and 13

Part III

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.

Do not 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.

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 details.

Column (e)

Line 8

Line 9

Include the line 11a amount on

Schedule D (Form 1040), line 4;

Schedule D (Form 1041), line 2; or as a

short-term capital loss on the Schedule

D for your return, and enter “Form 6781,

Part II” in column (a) of that Schedule D.

Include the line 11b, columns (h) and

(i) amounts on Schedule D (Form 1040),

line 11, columns (f) and (g); Schedule D

(Form 1041), line 7, columns (f) and (g);

or only the column (h) amount as a

long-term capital loss on the Schedule D

for your return, and enter “Form 6781,

Part II” in column (a) of that Schedule D.

Include the line 13a amount on

Schedule D (Form 1040), line 4;

Schedule D (Form 1041), line 2; or as a

short-term capital gain on the Schedule

D for your return, and enter “Form 6781,

Part II” in column (a) of that Schedule D.

Include the line 13b, columns (f) and

(g), amounts on Schedule D (Form 1040),

line 11, columns (f) and (g); Schedule D

(Form 1041), line 7, columns (f) and (g);

or only the column (f) amount as a

If you have comments concerning the

accuracy of these time estimates or

suggestions for making this form

simpler, we would be happy to hear from

you. See 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:

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.

You are not required to provide the

information requested on a form that is

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unless the form displays a valid OMB

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relating to a form or its instructions must

be retained as long as their contents

may become material in the

administration of any Internal Revenue

law. Generally, tax returns and return

information are confidential, as required

by section 6103.

Partnerships enter the amount from line Line 10, Column (g) 5 on Form 1065, Schedule K, line 7.

Electing large partnerships enter the

amount from line 5 on Form 1065-B,

Part II, line 5. 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 are left blank.

Include this amount on Schedule D

(Form 1040), line 4; Schedule D (Form

1041), line 2; or 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 that

Schedule D.

Include this amount on Schedule D

(Form 1040), line 11, column (f);

Schedule D (Form 1041), line 7, column

(f); or 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 that Schedule D.

Enter the property and delivery date,

and indicate whether the property is a

long or short position.

For positions closed out or sold, enter

the closing price or sales price.

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 details.

Include in this column any loss not

allowed in the prior year to the extent of

the unrecognized gain.

Enter the unrecognized gain on positions

offsetting those in columns (a) through

(f). 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 2001 tax year.

Enter in these columns the gain or (loss)

for 28% rate transactions.

Separate recognized gains and losses

into short-term and long-term. Attach a

separate schedule. For information

about holding periods for straddle

positions, see Pub. 550 and Temporary

Regulations section 1.1092(b)-2T. Attach

separate schedules 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.

mixed straddle and that are non-section

1256 positions if no disposition of a

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.

long-term capital gain on the Schedule D

for your return, and enter “Form 6781,

Part II” in column (a) of that Schedule D.

Recordkeeping 11 hr., 28 min.

Learning about the 

law or the form 2 hr., 9 min.

Preparing the form 3 hr., 22 min.

Copying, assembling,

and sending the form

to the IRS 16 min.