Call Put stock option in form 1099-B and section 1256

[bhbaothebeginning]

I bought and sold Call Put stock option (never exercised them) on Robinhood and they're reported in my 1099-B form, I already imported them into Turbotax under 'Stocks, Mutual Funds, Bonds, Other' income.

The next section ask 'Any Straddles or Section 1256 Contracts?', my question is are these Call Put stock option I mentioned above considered 'Section 1256 Contracts'?

[MinhT1]

Yes, a call/put option is known as a straddle and is a section 1256 contract.

Futures contracts and straddles are Section 1256 contracts for the IRS.

Please read this TurboTax article on how to report income on Section 1256 contracts.

You'll need to complete form 6781.

To do this in TurboTax, please follow these steps:

• Click on Search on the top right of your screen
• In the search box, type form 6781
• In the search result page, click on Jump to form 6781
• TurboTax will take you through a questionnaire where you can enter your information

[bhbaothebeginning]

I checked 1099-B, under 'section 1256 contracts', it reported 0.00 so what should I enter into from 6781

Thanks 

[DianeW777]

It depends.  Calls and Puts can be considered Section 1256 investment positions.  If the following information is not provided on your Form 1099-B, and if you do not believe you had any investments described below there is nothing to report.

• For Section 1256 option contracts, “Section 1256 option” or other appropriate description may be shown for Box 1a. And there is nothing Boxes 8, 9, 10 and 11, there is nothing to report.

If you do need to complete Form 6781, you can use the link below and your statements to determine whether you have Marked to Market or Straddles. Follow the instructions to reach this section of TurboTax.

• Click on Search (upper right)  > type form 6781 >  Press Enter > click on Jump to form 6781 >  Follow the screen prompts

Gains and losses on Section 1256 investments and straddles

Under normal circumstances, if you buy a stock at $100 per share and hold it for 10 years, you don't have to report any gains or losses until you sell it. With Section 1256 investments, IRS requires you to report actual or would-be gains and losses through the end of the year on Form 6781. The basics of Section 1256 investments are as follows:

• You report gains and losses—as a result of an actual sale or the fair market value—through December 31 of each year.
• You complete Form 6781 even if you keep the investments.
• The process of assigning fair market value to investments you continue to hold, and don’t sell, is called “mark to market.”
• For tax purposes, every Section 1256 gain or loss is treated as being 60% long term and 40% short term, no matter how long you own it.  
  • Long term gains, defined as those held for longer than one year, generally have more advantageous tax characteristics than short-term gains, which are held for one year or less.
• See this link for more detail to determine if you have Section 1256 gains or losses: What is Form 6781?
• Instructions for Form 6781