I’m not sure of the calculation to carryback my net section 1256 contracts loss to a previous year.
Form 6781 instructions say
Your net section 1256 contracts loss is the smaller of:
1. The excess of your losses from section 1256 contracts over the total of (a) your gains from section 1256 contracts plus (b) $3,000 ($1,500 if married filing separately)
OR
2. The total you would figure as your short-term and long-term capital loss carryovers to 2023 if line 6 of Form 6781 were zero. I know how to get this number so we will only discuss the first option above.
How do I calculate the first option shown above? I interpret the rule to choose the calculation A below. Is the correct method A or B?
A. Excess net section 1256 contracts loss over gains -20,000
Capital gains stocks +2000 (ignore - the instructions above don’t mention stocks!)
Plus +3000
Excess net section 1256 contracts loss over gains -17,000 to carryback to previous year
I found an old post and this is how they explained it in example.
B. Excess net section 1256 contracts loss over gains -20,000
Capital gains stocks +2000
Net losses on both combined -18000
Plus +3000
Net section 1256 contract loss -15000 to carryback to previous year. This option is forcing you to take an overall 3000 loss on current taxes.
