6781 Gains and Losses From Section 1256 OMB No. 1545-0644
Department of the Treasury
Contracts and Straddles 2010
Internal Revenue Service ▶ Attach to your tax return. Sequence No. 82
Name(s) shown on tax return Identifying number
Check all applicable boxes (see instructions). A Mixed straddle election C Mixed straddle account election
B Straddle-by-straddle identification election D Net section 1256 contracts loss election
Part I Section 1256 Contracts Marked to Market
(a) Identification of account (b) (Loss) (c) Gain
2 Add the amounts on line 1 in columns (b) and (c) . . . . . . . . . . . . 2 ( )
3 Net gain or (loss). Combine line 2, columns (b) and (c) . . . . . . . . . . . . . . . . . 3
4 Form 1099-B adjustments. See instructions and attach schedule . . . . . . . . . . . . . . 4
5 Combine lines 3 and 4 . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Note: If line 5 shows a net gain, skip line 6 and enter the gain on line 7. Partnerships and S corporations, see
6 If you have a net section 1256 contracts loss and checked box D above, enter the amount of loss to be
carried back. Enter the loss as a positive number . . . . . . . . . . . . . . . . . . 6
7 Combine lines 5 and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 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
9 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
Part II Gains and Losses From Straddles. Attach a separate schedule listing each straddle and its components.
Section A—Losses From Straddles
(e) Cost or If column (e) (g) (h) Recognized loss.
(c) Date other basis is more than Unrecognized If column (f) is more
entered (d) Gross
(a) Description of property closed out plus (d), enter gain on than (g), enter
into or sales price
or sold expense of difference. offsetting difference.
sale Otherwise, positions Otherwise, enter -0-
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) . . . . . . . . . . . . . . . . . . . . . . . . 11a ( )
b Enter the long-term portion of losses from line 10, column (h), here and include on the appropriate line of
Schedule D (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . 11b ( )
Section B—Gains From Straddles
(b) Date (f) Gain. If column
(c) Date (e) Cost or other
entered (d) Gross (d) is more than (e),
(a) Description of property closed out basis plus
into or sales price enter difference.
or sold expense of sale
acquired Otherwise, enter -0-
13a 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, column (f), here and include on the appropriate line of
Schedule D (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . 13b
Part III Unrecognized Gains From Positions Held on Last Day of Tax Year. Memo Entry Only (see instructions)
(e) Unrecognized gain.
(b) Date (c) Fair market value on last (d) Cost or other basis If column (c) is more
(a) Description of property
acquired business day of tax year as adjusted than (d), enter difference.
Otherwise, enter -0-
For Paperwork Reduction Act Notice, see page 4. Cat. No. 13715G Form 6781 (2010)
Form 6781 (2010) Page 2
General Instructions Gains or losses on section 1256
contracts open at the end of the year, or
section 1256 position, enter the gain or
loss in Part I of Form 6781 and identify
Section references are to the Internal terminated during the year, are treated the election.
Revenue Code unless otherwise noted. as 60% long term and 40% short term,
regardless of how long the contracts Box C. Mixed Straddle
What's New were held. Account Election
The Dodd-Frank Wall Street Reform and
Consumer Protection Act excludes Straddle Make this election according to
certain agreements from the definition of Temporary Regulations section
A straddle means offsetting positions 1.1092(b)-4T(f) to establish one or more
section 1256 contracts (discussed with respect to personal property of a
below). Effective for tax years beginning mixed straddle accounts for 2011, by the
type that is actively traded. due date (without extensions) of your
after July 21, 2010, a section 1256
2010 tax return. To make this election,
contract does not include any interest Offsetting Positions check box C and attach to your return
rate swap, currency swap, basis swap,
commodity swap, equity swap, equity If there is a substantial decrease in risk (or your request for an extension of time
index swap, credit default swap, interest of loss to a taxpayer holding a position to file) the statement required by the
rate cap, interest rate floor, or similar because that taxpayer or a related party regulations. Report the annual account
agreement. also holds one or more other positions, net gain or loss from a mixed straddle
then those positions are offsetting and account in Part II and identify the
Purpose of Form may be part of a straddle. However, if an election. See Temporary Regulations
identified straddle is properly section 1.1092(b)-4T(c)(4) for limits on
Use Form 6781 to report: established, other positions held by the the total annual account net gain or loss.
• Any gain or loss on section 1256 taxpayer will not be treated as offsetting
contracts under the mark-to-market Note. If you did not make any of the
with respect to any position which is
rules, and above elections and you have a loss on
part of the identified straddle.
the section 1256 component, use Part II
• Gains and losses under section 1092 to reduce the loss by any unrecognized
from straddle positions.
Box A. Mixed Straddle
gain on the non-section 1256
For details on section 1256 contracts
Election component before making an entry in
and straddles, see Pub. 550, Investment Under section 1256(d), you can elect to Part I. You also must reduce the loss
Income and Expenses. have the mark-to-market rules not apply from any section 1256 component of a
to section 1256 contracts that are part straddle that would be a mixed straddle
Section 1256 Contract of a mixed straddle. A mixed straddle is if the positions had been properly
any straddle in which at least one but identified as such.
A section 1256 contract is any:
not all of the positions is a section 1256
• Regulated futures contract, contract. On the day the first section Box D. Net Section 1256
• Foreign currency contract, 1256 contract forming part of the Contracts Loss Election
straddle is acquired, each position
• Nonequity option, If you have a net section 1256 contracts
forming part of the straddle must be
• Dealer equity option, or loss for 2010, you can elect to carry it
clearly identified as being part of such
back 3 years. Corporations,
• Dealer securities futures contract. straddle. If you make this election, it will
partnerships, estates, and trusts are not
apply for all later years and cannot be
For definitions of these terms and eligible to make this election. Your net
revoked without IRS consent. If you are
more details, see section 1256(g) and section 1256 contracts loss is the
making or have previously made this
Pub. 550. smaller of:
election, check box A and report the
Special rules apply to certain foreign section 1256 component in Part II • The excess of your losses from
currency contracts. See section 988 and instead of Part I. section 1256 contracts over the total of
Regulations sections 1.988-1(a)(7) and (a) your gains from section 1256
1.988-3. If an election is made under Box B. Straddle-By-Straddle contracts plus (b) $3,000 ($1,500 if
section 988(a)(1)(B) or 988(c)(1)(D), attach Identification Election married filing separately), or
to your return a list of the contracts • The total you would figure as your
covered by the election(s). On the Make this election for mixed straddles
short-term and long-term capital loss
attachment, show the net gain or loss according to Temporary Regulations
carryovers to 2011 if line 6 of Form 6781
reported from those contracts and section 1.1092(b)-3T(d) by clearly
were zero. Use a separate Schedule D
identify where the gain or loss is identifying each position by the earlier of
(Form 1040) and Capital Loss Carryover
reported on the return. If an election is (a) the close of the day the identified
Worksheet (in Pub. 550) to figure this
made under section 988(a)(1)(B), report mixed straddle is established or (b) the
on Form 6781 the gains and losses from time the position is disposed of. No
section 1256 contracts that are also straddle-by-straddle identification The amount you can carry back to any
section 988 transactions. election may be made for any straddle prior year is limited to the smaller of:
for which a mixed straddle election was • The gain, if any, that you would report
Options and commodities dealers made or if one or more positions are
must take any gain or loss from the on line 16 of Schedule D for that
includible in a mixed straddle account. If carryback year if only gains and losses
trading of section 1256 contracts into you are making or have previously made
account in figuring net earnings subject from section 1256 contracts were taken
this election, check box B. into account, or
to self-employment tax. See section
1402(i). If the net gain or loss is attributable to • The gain, if any, reported on line 16 of
a net non-section 1256 position, then Schedule D for that carryback year.
Mark-To-Market Rules the net gain or loss is treated as a short-
The amounts just described are
term capital gain or loss. Enter it directly
Under these rules, each section 1256 on Schedule D and identify the election. figured prior to any carryback from the
contract held at year end is treated as if If the net gain or loss is attributable to a loss year. Also, the carryback is allowed
it were sold at fair market value (FMV) only to the extent it does not increase or
on the last business day of the tax year.
The wash sale rules do not apply.
Form 6781 (2010) Page 3
produce a net operating loss for the enter the unrecognized gain. Use Part I For more details, see Pub. 550,
carryback year. The loss is carried to the for a loss on the disposition of one or chapter 4.
earliest year first. more positions that are part of a mixed Use Section B for gains from positions
straddle and that are non-section 1256 that are part of a straddle.
Make the election by checking box D positions if no disposition of a non-
and entering the amount to be carried Do not include in Part II a disposition
section 1256 position in the straddle of any of the following.
back on line 6. To carry your loss back, would be a long-term capital gain or
file Form 1045, Application for Tentative loss, and the disposition of one or more • A position that is part of a hedging
Refund, or an amended return. Attach an section 1256 positions in the straddle transaction.
amended Form 6781 and an amended would be a capital gain or loss.
Schedule D for the applicable years. • A loss position included in an identified
• The regulated futures part of a hedging straddle established before October 22,
On the amended Forms 6781 for the 2004, unless you disposed of all of the
years to which the loss is carried back, transaction. The gain or loss on a
hedging transaction is treated as positions making up the straddle.
report the carryback on line 1 of that
year’s amended Form 6781. Enter “Net ordinary income or loss. See Pub. 550 • A loss position included in an identified
section 1256 contracts loss carried back for details. straddle established after October 21,
from” and the tax year in column (a), and 2004.
enter the amount of the loss carried Line 5
• A position that is part of a straddle if all
back in column (b). Partnerships enter the amount from line
of the positions of the straddle are
5 on Form 1065, Schedule K, line 11.
section 1256 contracts.
Specific Instructions Electing large partnerships enter the
amount from line 5 on Form 1065-B, Part Column (a)
Part I II, line 5. S corporations enter the Enter the property and delivery date,
amount from line 5 on Form 1120S, and indicate whether the property is a
Line 1 Schedule K, line 10. Lines 6 through 9 in long or short position.
Include on line 1 all gains and losses Part I of Form 6781 do not apply to
from section 1256 contracts open at the partnerships or S corporations and are Column (d)
end of your tax year or closed out during left blank. For positions closed out or sold, enter
the year. If you received a Form 1099-B, the closing price or sales price.
Proceeds From Broker and Barter
Exchange Transactions, or equivalent See the instructions for box D. Column (e)
statement, include on line 1 the amount Line 8 For positions closed out or sold, enter
from box 11 of each form. In column (a), the cost or other basis plus
write “Form 1099-B” and the broker’s Include this amount on Schedule D
commissions paid. Include
name. List separately each transaction (Form 1040), line 4; or on Schedule D
nondeductible interest and carrying
for which you did not receive a Form (Form 1041), line 2; or as a short-term
charges allocable to personal property
1099-B or equivalent statement, or capital gain or (loss) on the Schedule D
that is part of a straddle. If any part of
received a Form 1099-B that is not for for your return and enter “Form 6781,
an unallowed loss from an offsetting
your tax year. Part I” in column (a) of that Schedule D.
position established in an identified
If you are completing an amended Line 9 straddle after October 21, 2004,
2010 Form 6781 to carry back a net Include this amount on Schedule D increased your basis in the position, also
section 1256 contracts loss from 2011 or (Form 1040), line 11; or on Schedule D include that amount. See Pub. 550 for
a later year, report the carryback on line (Form 1041), line 7; or as a long-term details.
1. Enter “Net section 1256 contracts loss capital gain or (loss) on the Schedule D Line 10, Column (f)
carried back from” and the tax year in for your return and enter “Form 6781,
column (a), and enter the amount of the Include in this column any loss not
Part I” in column (a) of that Schedule D.
loss carried back to 2010 in column (b). allowed in the prior year to the extent of
See the instructions for box D for Part II the unrecognized gain.
details. Line 10, Column (g)
Use Section A for losses from positions
Line 4 that are part of a straddle. Generally, a Enter the unrecognized gain on positions
If the Form 1099-B you received loss is allowed to the extent it exceeds offsetting those in columns (a) through
includes a straddle or hedging the unrecognized gain on offsetting (f). Figure the amount to enter in this
transaction (as defined in section positions. The part of the loss not column by subtracting the cost or other
1256(e)(2)), you may need to make allowed is treated as if incurred in the basis of the offsetting position from the
certain adjustments listed below. Attach following year and is allowed to the settlement price of that position as of
a schedule listing each of these same extent. However, a loss from a the close of the last business day of
adjustments and enter the total(s) on position established in an identified your 2010 tax year.
line 4. straddle after October 21, 2004, is not
allowed. Instead, the basis of each Lines 11 and 13
• The regulated futures part of a mixed offsetting position in the identified Separate recognized gains and losses
straddle, if you made any of the mixed straddle that has unrecognized gain is into short-term and long-term. Attach a
straddle elections. increased by the amount of the separate schedule. For information
• The amount of the loss, if you did not unallowed loss multiplied by the about holding periods for straddle
make any of the mixed straddle following fraction: positions, see Pub. 550 and Temporary
elections or the straddle was not Regulations section 1.1092(b)-2T. Attach
The unrecognized gain (if any) on the separate schedules for (a) section 988
identified as a mixed straddle and you offsetting position
had a loss on the regulated futures part contracts that are part of a mixed
that was less than the unrecognized gain The total unrecognized gain on all positions straddle and (b) any gain on the
on the nonregulated futures part. If the that offset the loss position in the identified disposition or other termination of any
unrecognized gain is less than the loss, straddle. position held as part of a conversion
Form 6781 (2010) Page 4
transaction (as defined in section antiques, metals (such as gold, silver, Paperwork Reduction Act Notice. We
1258(c)). Identify the net gain or loss and and platinum bullion), gems, stamps, ask for the information on this form to
report it on Form 4797, line 10. coins, alcoholic beverages, and certain carry out the Internal Revenue laws of
other tangible property. the United States. You are required to
Line 11a give us the information. We need it to
If any of the gain or loss you reported
Include this amount on Schedule D ensure that you are complying with
in Part II is a collectibles gain or (loss)
(Form 1040), line 4; or on Schedule D these laws and to allow us to figure and
and you are filing Form 1040 or Form
(Form 1041), line 2; or as a short-term collect the right amount of tax.
1041, follow the instructions below for
capital loss on the Schedule D for your the form you file. You are not required to provide the
return and enter “Form 6781, Part II” in information requested on a form that is
column (a) of that Schedule D. Form 1040. If you checked “Yes” on
subject to the Paperwork Reduction Act
line 17 of Schedule D (Form 1040),
Line 11b unless the form displays a valid OMB
include the collectibles gain or (loss)
control number. Books or records
Include this amount on Schedule D from Part II on line 3 of the 28% Rate
relating to a form or its instructions must
(Form 1040), line 11; or on Schedule D Gain Worksheet in the Instructions for
be retained as long as their contents
(Form 1041), line 7; or as a long-term Schedule D (Form 1040).
may become material in the
capital loss on the Schedule D for your Form 1041. If you must complete the administration of any Internal Revenue
return and enter “Form 6781, Part II” in 28% Rate Gain Worksheet in the law. Generally, tax returns and return
column (a) of that Schedule D. Instructions for Schedule D (Form 1041), information are confidential, as required
Line 13a include the collectibles gain or (loss) by section 6103.
from Part II on line 3 of that worksheet.
Include this amount on Schedule D The time needed to complete and file
(Form 1040), line 4; or on Schedule D Part III this form will vary depending on
(Form 1041), line 2; or as a short-term individual circumstances. The estimated
Complete Part III by listing each position burden for individual taxpayers filing this
capital gain on the Schedule D for your
(whether or not part of a straddle) that form is approved under OMB control
return and enter “Form 6781, Part II” in
you held at the end of the tax year number 1545-0074 and is included in
column (a) of that Schedule D.
(including any position you are treated the estimates shown in the instructions
Line 13b as holding because it is held by a for their individual income tax return. The
Include this amount on Schedule D related party) if the FMV of the position estimated burden for all other taxpayers
(Form 1040), line 11; or on Schedule D at such time exceeds your cost or other who file this form is shown below.
(Form 1041), line 7; or as a long-term basis as adjusted.
Recordkeeping . . . 10 hr., 31 min.
capital gain on the Schedule D for your Do not include positions that are part
return and enter “Form 6781, Part II” in of an identified straddle or hedging Learning about the
column (a) of that Schedule D. transaction, property that is stock in law or the form . . . 1 hr., 57 min.
Collectibles gain or (loss). A trade or inventory, or property subject to Preparing the form . . 3 hr., 9 min.
collectibles gain or (loss) is any depreciation used in a trade or business.
long-term gain or deductible long-term Do not complete Part III if you do not and sending the form
loss from the sale or exchange of a have a recognized loss on any position to the IRS . . . . . . . . 16 min.
collectible that is a capital asset. (including regulated futures contracts).
Collectibles include works of art, rugs, 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.