I have many section 1256 contracts for index options. How do I enter a summary per broker? The path is not obvious under "Contracts and Straddles".

[ClintG]

The answer from a year ago does not seem to apply. What specific option do I need to select to summarize?

From DaveF1006: You will start entering information about your contract elections and then you will reach a screen that says How to Report Your Transactions. Here is where you will select I will report  the totals from each broker or account.

[DawnC · Accepted solution]

You'll find section 1256, Contracts and Straddles under Less Common Investments and Savings this year.   After clicking Start, answer Yes, that you have straddles/sec 1256 contracts to report.  

The next screen will ask about any applicable elections/Form 6781.  

The next screen is where you will select the type of transactions you are reporting (gains/losses/marked to market).  

The next screen is where you can choose to summarize the information by broker.  

Enter the summarized data from the first broker, and then on the Contracts Summary page, click on +Add the add another broker summary

[ClintG]

@DawnC  Thank you so much for the detailed answer. I found that the only way to get to the summary option is to select "Section 1256 contracts marked to market". If I just select "Losses from straddles" and "Gains from straddles", I get to a different screen to enter individual straddle details.

I am assuming that index options (like $SPX spreads) can be considered as "Section 1256 contracts marked to market". It would be very cumbersome to list each individual spread/straddle otherwise.

[DawnC]

Yes, the option to summarize transactions by a broker is the first option - Section 1256 contracts marked to market.   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. The wash sale rules don’t apply.  If your section 1256 contracts produce capital gain or loss, gains or losses on section 1256 contracts open at the end of the year, or terminated during the year, are treated as 60% long-term and 40% short-term, regardless of how long the contracts were held.  Index options follow these rules.

The mark-to-market rules don’t apply if you properly and timely identified a section 1256 contract as a hedge.

A section 1256 contract is any: 

• Regulated futures contract, 

• Foreign currency contract, 

• Nonequity option, 

• Dealer equity option, or 

• Dealer securities futures contract. 

For definitions of these terms and more details, see section 1256(g) and Pub. 550. 

These contracts are reported on Form 6781.   The form link has instructions that summarize the terms and elections used.   The Pub. link above is detailed.