Knowledge Base

14233: Form 6781 - Section 1256 Contracts and Straddles

Fed Returns Generally

Where can I report gains and losses on Form 6781 - Section 1256 Contracts and Straddles in Drake Tax?

Screen 6781 Commodity Futures and Straddles is available in most return types:

Federal Return Type Location
1040 Income tab
1041 Assets/Sales tab
1120 Assets-Sales-Recapture tab
1120-S Assets-Sales-Recapture tab
1065  Assets-Sales-Recapture tab

Some elections are not available where disallowed by IRS instructions. When Election C, Mixed straddle account election, is chosen, a SCH - Unformatted Attachment with statement number 688 is required. 

Form 1099-B

When Form 1099-B contains amounts in boxes 8 - 11, the statement is from a Regulated Futures Contracts ​Broker, Foreign Currency Contracts Broker, or Section 1256 Option Contracts Broker.

Gains (or Losses) from these transaction types are reported on Form 6781 based on the contract type. For ease of navigation, screen 8949 contains a link to screen 6781.

Business Returns

A taxpayer cannot make a Net section 1256 contracts loss election (box D) on Form 6781 in a 1065, 1120, 1120S, or 1041 return. Consequently, Drake Tax does not offer that election on screen 6781 in business returns. The other elections for form 6781 (boxes A, B, and C) are available on screen 6781 in business returns.  

The instructions on Form 6781, page 2, specify that corporations, partnerships, estates and trusts are not eligible to make this election.

For more information about entering Gains and Losses From Section 1256 Contracts and Straddles, see Form 6781 Instructions, or Publication 550

Drake Tax does not support the creation of Form 1045 for a Section 1256 Loss carryback. A fillable Form 1045 is available from IRS, if needed. 

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