How to enter Section 1256 Option Contracts at the bottom on Form 1099-B

[dhawal55]

Turbo tax is ignoring "Section 1256 Option Contracts" at the bottom of import Form 1099-B from Fidelity. I tried to enter it manually but it is very confusing.

I went to "Contracts and Straddles". There are 4 options:
- Mixed Straddle election
- Straddle-by-straddle identification election

- Mixed straddle account election

- Net Section 1256 contracts loss election

There is no instructions on which one to choose. I picked the last one based on some online post.

Now, there are again more 5 options to choose from with no help. I choose "Section 1256 contracts marked to market". I entered Broker, description (enter amount here since my form had amount instead of description), Gain and Losses (#11) and click Done. 

Now it asks "Amount to be Carried Back", which I have no idea what it means. These are losses I incurred in 2025 on closed contracts. If I leave it blank, no forms show up in my "Investments and Savings" section

It will be so much better if Turbotax could auto import this and we don't have to worry about all these details

[DavidD66]

To report your Section 1256 contracts

• Navigate to Wages & Income
• Scroll down to "Less Common Investments and Savings"
• Click on the down arrow to expand
• Next to "Contracts and Straddles" select "Start"
• Answer "Yes" to "Any Straddles or Section 1256 Contracts?"
• On the next screen, it is highly unlikely that you need to make any elections, so just click "Continue"
• On the screen with "Contracts and Straddles", more than likely you only need to select Section 1256 contracts...  You may want to read the IRS instructions for Form 6781, Gains and Losses from Section 1256 Contracts and Straddles
• Select "I'll report the totals from each broker or account.
• Enter the information to report your profits and losses from your Section 1256 Options transactions.  

[dhawal55]

The options you mentioned is not what I see in TT online. I see the options that I mentioned in my post. Are you saying, i should not check any of them? I do so Form 6781 but the losses are not added to my Capital Loss Carryover. Why is it so?

[DaveF1006]

If you don't want to carry the loss back and would rather have it carry forward to next year, follow these steps:

1. Review the "Elections" Screen: Go back to the Contracts and Straddles section. When it asks about elections, ensure you did not select the "Net section 1256 contracts loss election" (Box D).
2. Check Form 6781, Line 6: If you can view your tax summary or the form itself, look at Line 6. If there is an amount there, TurboTax thinks you are carrying that loss back to a previous year.
3. Verify Schedule D: Once the carryback election is cleared, the loss from Form 6781 should flow to Schedule D (Lines 4 and 11). If your total capital losses exceed your gains, you should see the $3,000 limit applied on your Form 1040, and the remainder will appear in your Capital Loss Carryover Worksheet for next year.

[atn888]

Hi I have the same issue with 1256.  I don't see the option as pointed out by the expert.  I don't see how to enter on 6781.  I go to form and I don't have form 6781.  Please further help me on this topic.

[DianeW777]

The best approach to enter your Section 1256 Option contracts is to start with the step below and continue with steps provided above:

• TurboTax Online or TurboTax Desktop:
  1. Search (upper right) > Type Form 6781 > Click the Jump to... link 
  2. Answer 'Yes' to 'Any Straddles or Section 1256 Contracts?'
  3. On the next screen, it is highly unlikely that you need to make any elections, so just click Continue
  4. On the screen with 'Contracts and Straddles', more than likely you only need to select Section 1256 contracts...  
  5. Select 'I'll report the totals from each broker or account.'
  6. Enter the information to report your profits and losses from your Section 1256 Options transactions.  

Review the information provided by both of our tax experts @DavidD66 and @DaveF1006.

Note: Section 1256 contracts are IRS-regulated financial instruments—including futures, non-equity options, and dealer equity options—that receive special 60/40 tax treatment. They are marked-to-market at year-end (treated as sold on the last business day) and taxed as 60% long-term and 40% short-term capital gains, regardless of holding period.

@atn888