topic Can I use TurboTax to carryback losses on Section1256 contracts (as described in IRC1212). I am individual married filing jointly. in Get your taxes done using TurboTax

Can I use TurboTax to carryback losses on Section1256 contracts (as described in IRC1212). I am individual married filing jointly.

Leighton1900 — Sun, 13 Dec 2020 19:08:38 GMT

Re: Can I use TurboTax to carryback losses on Section1256 contracts (as described in IRC1212). I am individual married filing jointly.

M-MTax — Sun, 13 Dec 2020 21:54:48 GMT

Yes and you have to file an amended return.

Re: Can I use TurboTax to carryback losses on Section1256 contracts (as described in IRC1212). I am individual married filing jointly.

Anonymous — Sun, 13 Dec 2020 22:09:35 GMT

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.

Re: Can I use TurboTax to carryback losses on Section1256 contracts (as described in IRC1212). I am individual married filing jointly.

fanfare — Sun, 13 Dec 2020 23:11:21 GMT

Amending two years back is a real pain.

If you think you can recover your losses this year, don't bother. Instead carry forward your loss.

Re: Can I use TurboTax to carryback losses on Section1256 contracts (as described in IRC1212). I am individual married filing jointly.

Leighton1900 — Sat, 19 Dec 2020 04:47:54 GMT

Thanks for all the replies.

How much losses can I carry back? Here is an example. Let's say

I want to carry back $100K losses (1256 contracts) to previous 3 years

In 2019, I have 30K short term gains on 1256 contracts. And 40K short term gains (capital gains). Can I carryback 30K or 40K to 2019?

Re: Can I use TurboTax to carryback losses on Section1256 contracts (as described in IRC1212). I am individual married filing jointly.

Anonymous — Sat, 19 Dec 2020 06:19:48 GMT

"In 2019, I have 30K short term gains on 1256 contracts"

your info does not make sense. you can not have just $30K of stcg from 1256 contracts. gains and losses on 1256 contracts are split 60% long term 40% short term.

if you have net 1256 losses they must first be carried back to 3 years assuming you made the election for the loss year. you can choose how much to carryback

however, there is a limit. it's the smaller of your net 1256 losses less $3,000 (or the net capital loss shown on schedule D that can be carried over to the next year assuming no 1256 carryback election is made. (say $100K in net 1256 losses and $20K in other LTCG AMD $10K in other STCG. $3,000 in net capital losses is allowed. c/b is $67K

there are also limits to the amounts that can be used in the c/b year.

smaller of (these are before the 1256 c/b)

1) net 1256 gains for c/b year

2) line gain 16 of schedule D.

Re: Can I use TurboTax to carryback losses on Section1256 contracts (as described in IRC1212). I am individual married filing jointly.

Leighton1900 — Mon, 21 Dec 2020 00:27:38 GMT

Thanks for the reply. Line 16 of Schedule D includes capital gains from stocks also (along with gains from 1256 contracts ). Does it mean carryback losses of 1256 contracts offsets entire amount mentioned on line 16 of Schedule D (irrespective of the source of gains) of the previous year? My 1256 losses for current tax year are huge (they need to carried forward even after carryback to 3 previous years).

---------------

there are also limits to the amounts that can be used in the c/b year.

smaller of (these are before the 1256 c/b)

1) net 1256 gains for c/b year

2) line gain 16 of schedule D.

---------------

Re: Can I use TurboTax to carryback losses on Section1256 contracts (as described in IRC1212). I am individual married filing jointly.

MSCO9241 — Mon, 21 Dec 2020 02:37:43 GMT

c/b year $50 net capital gains (line 16) including 1256 gains of $30 b/4 c/b. c/b limited to $30

c/b year $20k net capital gains including 1256 gains of $30K b/4 c/b. c/b limited to $20K

Re: Can I use TurboTax to carryback losses on Section1256 contracts (as described in IRC1212). I am individual married filing jointly.

Leighton1900 — Mon, 21 Dec 2020 03:07:23 GMT

Thanks for the all replies. All my questions are answered except one last 1.

How do I file amendment using Turbotax?. Where do I enter carryback amount (in turbotax online) while preparing amendment. I went thro the questionnaire again. I didn't see any question related to "Carryback" for 1256 contracts.

Do I have to go to tax professional or do it thro Turbotax?

Re: Can I use TurboTax to carryback losses on Section1256 contracts (as described in IRC1212). I am individual married filing jointly.

MSCO9241 — Mon, 21 Dec 2020 09:37:34 GMT

were the original return prepared using TT? if not it might be better to use a pro.

To carry your loss back 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)

Re: Can I use TurboTax to carryback losses on Section1256 contracts (as described in IRC1212). I am individual married filing jointly.

madushagamage — Sat, 17 Apr 2021 18:25:13 GMT

From https://www.irs.gov/pub/irs-pdf/f6781.pdf :

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) 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) for that carryback year.

An example scenario :

c/b year $18k net capital gains (from line 16 of Schedule D), but has a 1256 loss of of $10K b/4 c/b (from form 6781).

What is the c/b allowed (if any) in this scenario? Is it $18k, or zero?