Form 6781: Section 1256 Contracts Basics

Form 6781 is titled Gains and Losses From Section 1256 Contracts and Straddles. You use it for two kinds of results. One is section 1256 contracts under the mark-to-market rules. The other is gains and losses from straddle positions. IRS: Form 6781 (2025)

Which contracts the form covers

The form lists several contract types. Its text names regulated futures contracts, foreign currency contracts, and nonequity options. The form applies the mark-to-market rules to these contracts. IRS: Form 6781 (2025)

The 40% and 60% split

Part I works out one net amount first. Then the form splits that amount. Line 8 takes 40% of the net. That part is short-term. Line 9 takes 60%, which is long-term. IRS: Form 6781 (2025)

The form tells you where each part goes. The short-term part goes to line 4 of Schedule D or to Form 8949. The long-term part goes to line 11 of Schedule D or to Form 8949. IRS: About Form 6781

Part I, line by line

Line 1 lists each account. Losses go in column (b). Gains go in column (c).
Line 2 adds the columns. Line 3 gives the net gain or loss.
Line 4 covers Form 1099-B adjustments. Attach a statement.
Line 5 combines lines 3 and 4.
Line 6 applies only if you have a net loss and checked box D. Otherwise enter zero.
Line 7 combines lines 5 and 6. Lines 8 and 9 split it.

Part II: straddles

Part II covers gains and losses from straddle positions. Section A lists losses. Section B lists gains. List each straddle and its parts on a separate statement. IRS: Form 6781 (2025)

Lines 11a and 11b show the short-term and long-term parts of losses. Lines 13a and 13b show the same split for gains. Each part goes to Schedule D or to Form 8949. IRS: Form 6781 (2025)

Part III: memo entry

Part III lists unrecognized gains on positions you held on the last business day of the tax year. The form marks this part as a memo entry only. IRS: Form 6781 (2025)

Election boxes

At the top of the form, you check any elections that apply. They are the mixed straddle election, the straddle-by-straddle identification election, the mixed straddle account election, and the net section 1256 contracts loss election. The form's instructions explain each one. IRS: Form 6781 (2025)

Steps to follow

Get your broker's Form 1099-B and note the section 1256 contract totals.
Complete Part I and find the net gain or loss.
Split the net amount on lines 8 and 9.
Carry each part to Schedule D or Form 8949.
If you have straddles, complete Part II and attach a statement.

Records to keep

Keep your broker's year-end statements and Form 1099-B. Keep a list of each section 1256 contract with its gain or loss. Line 4 asks for Form 1099-B adjustments, and the form says to attach a statement for them. IRS: Form 6781 (2025)

Common mix-ups

The 40% and 60% split applies to the net amount on line 7. It does not apply to each trade on its own.
Section 1256 results are worked out on Form 6781 first. Then the lines 8 and 9 amounts go to Schedule D or Form 8949.
Part III is a memo entry. The form marks it that way, so its amounts are not part of the Part I split.

Straddle reporting in Part II uses a separate statement for each straddle. IRS: Form 6781 (2025)

Read the capital loss limit and carryover for what happens when losses exceed gains. Read stock and crypto sales on your return for Form 8949 and Schedule D. Read the wash sale rule for another loss rule.

General information, not advice for your situation.

Sources: Sources: IRS, Form 6781 (2025), Gains and Losses From Section 1256 Contracts and Straddles (https://www.irs.gov/pub/irs-pdf/f6781.pdf); IRS, About Form 6781 (https://www.irs.gov/forms-pubs/about-form-6781) This is general information, not advice about your specific return.

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