Form 6781 (2001) Page 2 General Instructions with respect to any position which is component before making an entry in part of the identified straddle. Part I. You also must reduce the loss Section references are to the Internal from any section 1256 component of a Revenue Code unless otherwise noted. Box A. Mixed Straddle straddle that would be a mixed straddle Purpose of Form Election if the positions had been properly Under section 1256(d), you may elect to identified as such. Use Form 6781 to report: have the mark-to-market rules not apply ● Any gain or loss on section 1256 to section 1256 contracts that are part Box D. Net Section 1256 contracts under the mark-to-market of a mixed straddle. A mixed straddle is Contracts Loss Election rules and any straddle in which at least one but If you have a net section 1256 contracts ● Gains and losses under section 1092 not all of the positions is a section 1256 loss for 2001, you may elect to carry it from straddle positions. contract. On the day the first section back 3 years. Corporations, estates, and 1256 contract forming part of the trusts are not eligible to make this For details on section 1256 contracts straddle is acquired, each position election. The amount that may be and straddles, see Pub. 550, Investment forming part of the straddle must be carried back may not be more than the Income and Expenses. clearly identified as being part of such net section 1256 contracts gain in the Section 1256 Contract straddle. If you make this election, it will year to which the loss is carried. The apply for all later years and cannot be loss is carried to the earliest year first. A section1256 contract is any: revoked without IRS consent. If you are See section 1212(c) for definitions of net ● Regulated furtures contract, making or have previously made this section 1256 contracts loss and net ● Foreign currency contract, election, check box A and report the section 1256 contracts gain. Make the ● Nonequity option, section 1256 component in Part II election by checking box D and entering instead of Part I. the amount to be carried back on line 6. ● Dealer equity option, or To carry your loss back, file an amended ● Dealer securities futures contract. Box B. Straddle-By-Straddle return and attach an amended Form For definitions of these terms and Identification Election 6781 for the applicable year. more details, see section 1256(g) and Make this election for mixed straddles Pub. 550. according to Temporary Regulations Specific Instructions Special rules apply to certain foreign section 1.1092(b)-3T(d) by clearly currency contracts. See section 988 and identifying each position by the earlier of Regulations sections 1.988-1(a)(7) and (a) the close of the day the identified Part I 1.988-3. If an election is made under mixed straddle is established or (b) the Line 1 section 988(a)(1)(B) or 988(c)(1)(D), time the position is disposed of. No attach to your return a list of the straddle-by-straddle identification Include on line 1 all gains and losses contracts covered by the election(s), election may be made for any straddle from section 1256 contracts open at the showing the net gain or loss reported for which a mixed straddle election was end of your tax year or closed out from those contracts and identifying made or if one or more positions are during the year. If you received a Form where the gain or loss is reported on the includible in a mixed straddle account. If 1099-B, Proceeds From Broker and return. If an election is made under you are making or have previously made Barter Exchange Transactions, or section 988(a)(1)(B), report on Form 6781 this election, check box B. equivalent statement, include on line 1 the gains and losses from section 1256 If the net gain or loss is attributable to the amount from box 9 of each form. In contracts that are also section 988 a net non-section 1256 position, then column (a), write “Form 1099-B” and the transactions. the net gain or loss is treated as a broker’s name. List separately each Options and commodities dealers short-term capital gain or loss. Enter it transaction for which you did not receive must take any gain or loss from the directly on Schedule D and identify the a Form 1099-B or equivalent statement, trading of section 1256 contracts into election. If the net gain or loss is or received a Form 1099-B that is not account in figuring net earnings subject attributable to a section 1256 position, for your tax year. to self-employment tax. See section enter the gain or loss in Part I of Form Line 4 1402(i). 6781 and identify the election. If the Form 1099-B you received Mark-To-Market Rules Box C. Mixed Straddle includes a straddle or hedging Under these rules, each section 1256 Account Election transaction (as defined in section contract held at year end is treated as if Make this election according to 1256(e)(2)), you may need to make it were sold at fair market value (FMV) Temporary Regulations section certain adjustments listed below. Attach on the last business day of the tax year. 1.1092(b)-4T(f) to establish one or more a schedule listing each of these mixed straddle accounts for 2002, by adjustments and enter the total on Straddle the due date (without extensions) of your line 4. A straddle means offsetting positions 2001 tax return. To make this election, ● The regulated futures part of a mixed with respect to personal property of a check box C and attach to your return straddle, if you made any of the mixed type that is actively traded. the statement required by the straddle elections. regulations. Report the annual account ● The amount of the loss, if you did not Offsetting Positions net gain or loss from a mixed straddle make any of the mixed straddle If there is a substantial decrease in risk account in Part II and identify the elections or the straddle was not of loss to a taxpayer holding a position election. See Temporary Regulations identified as a mixed straddle and you because that taxpayer or a related party section 1.1092(b)-4T(c)(4) for limits on had a loss on the regulated futures part also holds one or more other positions, the total annual account net gain or loss. that was less than the unrecognized then those positions are offsetting and Note: If you did not make any of the gain on the nonregulated futures part. If may be part of a straddle. However, if an above elections and you have a loss on the unrecognized gain is less than the identified straddle is properly the section 1256 component, use Part II loss, enter the unrecognized gain. Use established, other positions held by the to reduce the loss by any unrecognized Part I for a loss on the disposition of one taxpayer will not be treated as offsetting gain on the non-section 1256 or more positions that are part of a Form 6781 (2001) Page 3 mixed straddle and that are non-section Column (e) long-term capital gain on the Schedule D 1256 positions if no disposition of a for your return, and enter “Form 6781, For positions closed out or sold, enter non-section 1256 position in the straddle Part II” in column (a) of that Schedule D. would be a long-term capital gain or the cost or other basis plus commissions paid. Include loss, and the disposition of one or more Part III section 1256 positions in the straddle nondeductible interest and carrying would be a capital gain or loss. charges allocable to personal property Complete Part III by listing each position that is part of a straddle. See Pub. 550 (whether or not part of a straddle) that ● The regulated futures part of a for details. you held at the end of the tax year hedging transaction. The gain or loss on (including any position you are treated a hedging transaction is treated as Line 10, Column (f) as holding because it is held by a ordinary income or loss. See Pub. 550 Include in this column any loss not related party) if the FMV of the position for details. allowed in the prior year to the extent of at such time exceeds your cost or other Line 5 the unrecognized gain. basis as adjusted. Partnerships enter the amount from line Line 10, Column (g) Do not include positions that are part 5 on Form 1065, Schedule K, line 7. of an identified straddle or hedging Enter the unrecognized gain on positions Electing large partnerships enter the transaction, property that is stock in offsetting those in columns (a) through amount from line 5 on Form 1065-B, trade or inventory, or property subject to (f). Figure the amount to enter in this Part II, line 5. S corporations enter the depreciation used in a trade or business. column by subtracting the cost or other amount from line 5 on Form 1120S, Do not complete Part III if you do not basis of the offsetting position from the Schedule K, line 6. Lines 6 through 9 in have a recognized loss on any position settlement price of that position as of Part I do not apply to partnerships or S (including regulated futures contracts). the close of the last business day of corporations and are left blank. your 2001 tax year. Line 8 Paperwork Reduction Act Notice. We Line 10, Column (i) and Line 12, ask for the information on this form to Include this amount on Schedule D Column (g) carry out the Internal Revenue laws of (Form 1040), line 4; Schedule D (Form Enter in these columns the gain or (loss) the United States. You are required to 1041), line 2; or enter the amount as a for 28% rate transactions. give us the information. We need it to short-term capital gain or (loss) on the ensure that you are complying with Schedule D for your return, and enter Lines 11 and 13 these laws and to allow us to figure and “Form 6781, Part I” in column (a) of that collect the right amount of tax. Schedule D. Separate recognized gains and losses into short-term and long-term. Attach a You are not required to provide the Line 9 separate schedule. For information information requested on a form that is Include this amount on Schedule D about holding periods for straddle subject to the Paperwork Reduction Act (Form 1040), line 11, column (f); positions, see Pub. 550 and Temporary unless the form displays a valid OMB Schedule D (Form 1041), line 7, column Regulations section 1.1092(b)-2T. Attach control number. Books or records (f); or as a long-term capital gain or separate schedules for (a) section 988 relating to a form or its instructions must (loss) on the Schedule D for your return, contracts that are part of a mixed be retained as long as their contents and enter “Form 6781, Part I” in column straddle and (b) any gain on the may become material in the (a) of that Schedule D. disposition or other termination of any administration of any Internal Revenue position held as part of a conversion law. Generally, tax returns and return Part II transaction (as defined in section information are confidential, as required 1258(c)). Identify the net gain or loss and by section 6103. Use Section A for losses from positions report it on Form 4797, line 10. The time needed to complete and file that are part of a straddle. A loss is Include the line 11a amount on this form will vary depending on allowed only to the extent it exceeds the Schedule D (Form 1040), line 4; individual circumstances. The estimated unrecognized gain on offsetting Schedule D (Form 1041), line 2; or as a average time is: positions. The part of the loss not short-term capital loss on the Schedule Recordkeeping 11 hr., 28 min. allowed is treated as if incurred in the D for your return, and enter “Form 6781, Learning about the following year and is allowed to the Part II” in column (a) of that Schedule D. same extent. law or the form 2 hr., 9 min. Include the line 11b, columns (h) and Preparing the form 3 hr., 22 min. Use Section B for gains from positions (i) amounts on Schedule D (Form 1040), that are part of a straddle. line 11, columns (f) and (g); Schedule D Copying, assembling, Do not include in Part II a disposition (Form 1041), line 7, columns (f) and (g); and sending the form of one or more positions that are part of or only the column (h) amount as a to the IRS 16 min. a hedging transaction, a disposition of a long-term capital loss on the Schedule D If you have comments concerning the loss position included in an identified for your return, and enter “Form 6781, accuracy of these time estimates or straddle, or a disposition of a position Part II” in column (a) of that Schedule D. suggestions for making this form that is part of a straddle if all the Include the line 13a amount on simpler, we would be happy to hear from positions of the straddle are section Schedule D (Form 1040), line 4; you. See the instructions for the tax 1256 contracts. Schedule D (Form 1041), line 2; or as a return with which this form is filed. Column (a) short-term capital gain on the Schedule D for your return, and enter “Form 6781, Enter the property and delivery date, Part II” in column (a) of that Schedule D. and indicate whether the property is a Include the line 13b, columns (f) and long or short position. (g), amounts on Schedule D (Form 1040), Column (d) line 11, columns (f) and (g); Schedule D (Form 1041), line 7, columns (f) and (g); For positions closed out or sold, enter or only the column (f) amount as a the closing price or sales price.