I had capital loss on index option (such as SPX option, VIX option) in 2021, and I had never traded section 1256 contract before 2021.
For this year, I rarely trade section 1256 contract anymore, so it is very likely that I will never make capital gain from section 1256 in the future.
Why does it treat Section 1256 Contract Loss differently from stock capital loss?
How does it work? For example, if I had $10,000 stock short term capital loss in 2021 and $10,000 section 1256 contract short term loss (Profit or (loss) realized in 2021 on closed contracts), then if I have $20,000 stock capital short term gain in 2022, can I deduct 2021 section 1256 contract short term loss during next year tax return form?
Anyway, what does below screenshot mean (it is for Section 1256 Contract Loss)? How should I fill it out? It is challenge to file tax return on my own this year, this is my first time dealing with Section 1256 contract.
My understanding is: I can keep this section 1256 loss for future stock capital gain, correct? I don't want amend previous tax return form, which is annoying. Probably I cannot carry it back, since I did not have any trading related to Section 1256 contract, I also claimed $3000 stock capital loss in 2020 tax return already.
How does carry back work? Deduct $3000 from salary income (W2) and reduce $3000 on taxable income?
Or does it carry back to previous year's Section 1256 contract gain only? But I did not have section 1256 contract trade record before 2021.
If I have loss on Section 1256 contract in 2021, even if there was section 1256 contract gain in 2020, can I choose not to carry back (if the gain is small, then I don't want to amend 2020 tax return form)? In stead, I would like to carry Section 1256 contract loss forward? Can section 1256 loss be offset by stock capital gain in the future? I rarely trade section 1256 now.
Thanks.
