1256 reporting in TurboTax

[epiciocc12]

I had a 1256 loss in 2024 of $10000.  I also had a 1256 loss in 2025 of $3500.  Both are Futures trades. I notice that the Capital loss carryover section under Investment Income shows the previous year amount and the result of this year - so it's a running total. But the Straddles& Contracts section shows last year's loss and just this year's loss, NOT a cumulative of the two years. My question is will Turbo Tax tally these together for 2026, so If I have any 1256 gains in 2026, they can be offset by the previous 2 year losses?

[DavidD66]

Section 1256 contract net losses can be carried back up to three years to offset previous net 1256 gains, or carried forward indefinitely. Since the losses can be carried back they have to be tracked separately by year.  When carried forward, they will be combined, if necessary to offset losses.   

[Mike9241 · Accepted solution]

Section 1256 gains/losses become part of capital gains and losses. Look at your Forms 6781s and Schedule Ds for 2024 and 2025. On Form 6781, you'll see the 1256 losses, after any carryback on line 6, split 40% short-term (line 😎 and 60% long-tem (line 9). These losses are then carried to lines 4c and 8d of Schedule D to offset any capital gains from other sources. Only if there is a net loss on line 16 is there a carry-forward. But first, there is up to a  $3,000 reduction for the amount of capital losses allowed as a deduction on page 1 of the 1040. So if you have 1256 gains in 2026, how much is taxable depends on the capital loss carry-forward, if any, from 2025 and any other capital gains and losses you have in 2026. 

This is not intended to present what happens if you had straddles in the prior years.