make sure to include form 6781 with the return and check off the box on it for the1256 c/b
If you have a net section 1256 contracts
loss for 2019 or 2020, you can elect to carry it
back 3 years.
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 or
1040-SR) 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 or 1040-SR) for
that carryback year.
The amounts just described are
figured prior to any carryback from the
loss year. Also, the carryback is allowed
only to the extent it doesn’t increase or
produce a net operating loss for the
carryback year. The loss is carried to the
earliest year first.
