How to enter Section 1256 Option Contracts

[Jim4AU]

I'm not using "Forms Mode".  In the interview, it asks if you have options gains or losses.  I did and entered those.  Then you're asked if you have 1256 gains or losses.  Wait, I just entered those.  It could be a lot clearer.  Also, all the gains hit the K1 as short term, not 60/40 split between short and long.  That needs to be addressed.

[tagteam]

If I am not mistaken, I believe you need to enter these types of transactions in Forms Mode and, there, on Schedule K of your 1065. The result should be passed through to your partners on their K-1s (Line 11 with a C code). A Form 6781 should also be included in the return package.

[tagteam]

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@Jim4AU wrote:

.....all the gains hit the K1 as short term, not 60/40 split between short and long.  That needs to be addressed.

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No, it actually does not need to be addressed. The net gain should appear on Line 11 (C code) of your K-1s. When the partners input the figure on Line 11 (C code) into their individual income tax return, that figure will wind up being transferred to Form 6781 (in each partner's individual income tax return).

[Jim4AU]

Yes, actually it does need to be addressed.  The figure shows up on line 8 of the K1, all as short term gain - not split between long and short term gain.

[fanfare]

If you trade futures, your broker supplies line 8-11, usually on  a separate 1099-B, since it a separate clearing operation.

Only Line 11 has to be entered. See my post on this thread earlier.

[jayach]

So to confirm, is the amount from box 11 already included in the amount listed in 1d (proceeds)? I am using the import feature, and it is not clear if the 1256 amounts are automatically being incorporated.

Thank you!

[fanfare]

only you can confirm that.

Always print a copy of your completed tax return for your records, and review it carefully before e-Filing.
You will need it if you are audited by the IRS, or to amend if a TurboTax update changes your return or for any other reason,

AND, to find your AGI next year.

[Jim4AU]

On 03/23/22 I spoke with 2 different reps at Intuit about this problem.  Both reps agreed that it should be addressed and promised to escalate the issue, saying I should hear back in about 1 week.  As of today (04/29/22) I've heard nothing - no call and no email.  I tried calling but cannot get through the bots.

TT should be splitting the gains between short and long term.  The fact that it isn't means  you're paying too much tax.  Maybe Intuit doesn't want to address it because it will be a legal issue for them?

[clairbender]

I guess TT still hasn't addressed this. I recieved a 1099-B for hedging grain commodies and can't link that income to my Sch F.

[DaveF1006]

According to IRS instructions, Schedule F is used for profit and loss from farming. All income reported on 1099 B is investment income for hedging grain commodities and not considered Farm income therefore there is no discernable link between a 1099B and Schedule F. 

@clairbender

[Jim4AU]

Back to 1256...it is very difficult to enter 1256 gains/losses in TT business.  I also believe there is an error, as it does not split the gains/losses between long-term and short-term.  How do I get back to talking to a live person?  I have an existing case #.

[AbrahamT]

Simply type in the search bar in the right hand corner by the magnifying glass  contracts and straddles all in lower case

and then to Jump to contracts and straddles. Turbotax will seamlessly walk you step by step of the way in reporting the gain and losses of these option contracts as well as splitting between long- term and short-term.  

[wevans3]

Do you have to list individual transaction under 1256 contracts?  The way I think you said is just list the aggregate gains and losses that is on each account listed in Box 11.  I pulled my hair out for nothing.  Too bad TurboTax doesn't propagate that during the download of your investment accounts 1099b.  What it does do is put those in with the Proceeds from Broker & Barter Exchange Transactions forcing you to correct them.  What I did was delete them and that solved that problem. Then where do I put them and I found your comment. Thanks 

[wevans3]

Thank you Fanfare.

[Jim4AU]

But what if they're 1256 contracts and straddles?  Enter them under 1256 or contracts and straddles?  There are 2 different places and it isn't clear which way to enter them.  It's also easy to end up having them double entered.

Anyone have the CS number for TurboTax Business?  If so, I'll address it with them.