First, it's important to note that you must carry it back three years and then forward, to the extent there is Section 1256 gains in the earliest year (see the information below for more detail). If not, then you carry it forward to the second year, the first year and then over to 2023. You amend or change the 6781 Form and the Schedule D for the loss carryback.
It's best to use Form 1045, however TurboTax does not support IRS Form 1045 Application for Tentative Refund
The amount you can carry back to any prior year is limited to the smaller of:
• The gain, if any, that you would report on line 16 of Schedule D (Form 1040) for that carryback year if only gains and losses from section 1256 contracts were taken into account; or
• The gain, if any, reported on line 16 of Schedule D (Form 1040) for that carryback year.
Completing the form is similar to reporting any type of investment. Here’s the breakdown:
- Part I: Report your Section 1256 investment gains and losses at either the actual price at which you sold these investments or the "mark-to-market" price established on December 31 if you have not sold the investment.
- Part II: Report the gains and losses on your straddles, with losses reported in Section A and gains in Section B.
- Part III: Meant for any unrecognized gains you have on positions held at the end of the tax year, but you only have to complete it if you have a recognized loss on a position.
You might consider a tax preparer to assist you with this.
@john9yao
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