Carryback of Losses from Section 1256

[tensor77]

Hello,  I would like a clarification about the following rule regarding Carryback of Losses from Section 1256.:

"The amount you can carry back to any prior year is limited to the smaller of:
A. 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
B. The gain, if any, reported on line 16 of Schedule D (Form 1040) for that carryback year."

For instance, suppose that I had a loss of $10K  for A (in other words zero gain) and the overall gain for B was $20K. Then what is the smaller of A and B in this case? Is it zero? Or is it $20K, because in A it states "the gain, 'if any'."

I would appreciate your help. Thank you.

[Mike9241]

That's a net 1256 loss carryback. if you have a net gain from 1256 contracts for the year or even a net capital gain, there is no carryback.

[tensor77]

The A and B relate to "any prior year" that the loss is carried back to.  

For instance, there is a net 1256 loss of $30K for tax year of 2023, and I am asking about carrying back that loss to tax year of 2022. The A and B are associated with 2022 tax year.