the carryback must go to the third prior year (2019) first any left to the second (2020) and if any still left to 2021 - IRC 1212(c)
first you must figure what's available for carryback it's:
• Your net losses from section 1256 contracts (line 5 of 6781) - note there seems to be a conflict between the 6781 instructions, PUB 550 and code section 1212 (defines the rules for the 1256 loss election) the 6781 says the net 1256 losses reduce by the the sum of the net 1256 gains + 3000 (other than MFS). Neither the code section or Pub 550 mention the $3K. and testing Turbotax no error pops up if I elect to c/b the full net 1256 loss for the year (say report $100K in loss and $50K in gains Turbotax allows the full $50K as a loss c/b. Instructions are unofficial so I would go by the code section. The rules only limit the max that can be carried back. A taxpayer able to carryback the full amount can choose to carryback less)
• 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. Use a separate Schedule D (Form 1040) and Capital Loss Carryover Worksheet (in Pub. 550) to figure this amount. generally this would be line 16 of schedule D reduced by the amount of capital losses used in 2022
the tentative amount that can be carried back from 2022 can not exceed the loss on line 5 of the 6781. Part II amounts, if any don't enter into it
the amount that can be used in any of the prior years is the smaller of (for purposes of these computations they're computed before the carryback) :
1) the net 1256 gain that would be reported on line 16 of schedule D (all other capital gains and losses are eliminated from the schedule. I can't see how this would differ from line 5 of the 6781 for 2021
2) the gain on line 16 of schedule D
the carryback is allowed only to the extent it doesn’t increase or produce a net operating loss for the carryback year.
since you're saying 2019 and 2020 had net capital losses there is no carryback to those years due to 2) above
To carry your loss back, file Form 1045, Application for Tentative Refund, or an amended return 1040 X. Attach an amended Form 6781 and an amended Schedule D (Form 1040) for the applicable years.
On the amended Forms 6781 for the years to which the loss is carried back, report the carryback on line 1 of that year’s amended Form 6781. Enter “Net section 1256 contracts loss carried back from” and the tax year in column (a), and enter the amount of the loss carried back in column (b).
by reporting the the c/b on the 6781 it will automatically split any remaining net 1256 gain 60/40
