Boxes 8 through 11 on Form 1099-B are used to report gains and losses from Section 1256 contracts, which are subject to special IRS tax rules.
Section 1256 contracts include certain regulated futures contracts, foreign currency contracts, non-equity options, dealer equity options, and dealer securities futures contracts. These investments are generally subject to the IRS "mark-to-market" rules, meaning gains and losses are treated as if the contracts were sold at fair market value at the end of the tax year.
What Do Boxes 8-11 Report?
Boxes 8, 9, and 10 are used to calculate the total gain or loss from your Section 1256 contracts for the year.
The resulting net gain or loss is reported in:
- Box 11 - Profit or (Loss) Realized in Current Year on Closed Contracts
According to the IRS instructions for Form 1099-B, the amount reported in Box 11 is generally entered on Form 6781, Gains and Losses From Section 1256 Contracts and Straddles.
What Is Form 6781?
Form 6781 is used to report gains and losses from Section 1256 contracts and certain straddle transactions.
One unique feature of Section 1256 contracts is the 60/40 rule, which generally treats:
- 60% of the gain or loss as long-term capital gain or loss
- 40% of the gain or loss as short-term capital gain or loss
The program uses Form 6781 to calculate and transfer these amounts to the appropriate tax forms.
How Do I Enter Form 6781 in the Program?
To enter the information from Boxes 8-11 of your Form 1099-B:
- Go to Federal.
- Select Income.
- Choose Less Common Income.
- Select Gains and Losses From Section 1256 - Form 6781.
- Locate the section for Net Sec 1256 Contracts Gain/Loss.
- Enter the amount from Box 11 in the Contracts Marked to Market (Section 1256) field.
The program will use this information to complete Form 6781 and calculate the proper tax treatment.
What Information Should I Use?
When entering Form 6781, refer directly to your Form 1099-B and use:
- The net profit or loss reported in Box 11
- Any supporting statements included with your brokerage documents
If your broker provides additional Section 1256 worksheets, keep them with your tax records.
Keep Your Records
Be sure to retain:
- Form 1099-B
- Brokerage statements
- Supplemental tax reporting statements
- Records related to Section 1256 transactions
These documents can help support the amounts reported on Form 6781 and your tax return.