the net 1256 losses that can be carried back is limited to lesser of the net 1256 losses for the year or your net capital losses for the year reduced by any capital loss deduction.
$50,000 1256 losses for 2020
$30,000 other capital gains
net capital loss $20,000
allowable capital loss deduction $3,000
1256 loss that can be carried back $17,000
40% must be treated as short-term and 60% as longterm
or
$50,000 1256 losses for 2020
$2,000 other capital losses
net capital loss $52,000
allowable capital loss deduction $3,000
1256 loss that can be carried back $49,000
40% must be treated as short-term and 60% as long-term
the amount that can be used in a carryback year is the lesser of net Section 1256 gains or net capital gains.
the carryback cannot create or increase a net operating loss.
