Section 1256

Section 1256, built from your trades.

For people who file under Section 1256 because of the 60/40 split: your year valued at December 31, split and filled into Form 6781.

Get started

Free to connect and estimate. Forms from $59.

Example 2026 yearRead-only · Reviewed engine · Licensed CPAs
Example 2026 year1,524 trades · 3 venues
+$18,240
net · Jan 1 to Dec 31
1,012386126File
60/40 splithowever long held
60% long-term
40% short-term
Valued at Dec 3136 open, on record
Long-term · 60%
$10,944
Short-term · 40%
$7,296
If −$18,240
$3,000/yr · or carry back
Form 6781Part I
7Net gain18,240
8Short-term · 40%7,296
9Long-term · 60%10,944
Draft
Filling Form 6781Part IReady to fileForm 6781 · lines 8 and 9
How it works

Three rules shape the year.

The 60/40 rule in full

  1. 1. 60/40 split

    60% of a net gain or loss is long-term and 40% short-term, however long you held.

  2. 2. Valued at December 31

    Anything open at year end counts as sold at that day's price, and starts again January 1 at that price.

  3. 3. Loss carryback

    A net loss can be carried back three years against Section 1256 gains.

What you get

Form 6781 and the statement behind it.

  • Form 6781, Part INetted, with the split on lines 8 and 9.
  • Transaction statementEvery position with its December 31 price, and every trade behind it.
  • Transaction CSVEvery trade, settlement and year-end entry, with a legend.
Form 6781, Part IDraft
Line 1 · contracts, nettedfrom statement
Line 8 · short-term, 40%filled
Line 9 · long-term, 60%filled
Dec 31 price · on record ✓

Unsettled

Precedent, and arguments against.

Exchange-traded event contracts are regulated by the CFTC, the same agency as futures. The provision most often cited against this route is the swap exclusion in Section 1256(b)(2)(B).

There is no IRS guidance for prediction markets, but all income must be reported. Realize explains the options so you can choose for yourself or with one of our licensed CPAs.

The same year, every route.

See this year beside capital gains, gambling and ordinary income before you choose.

Compare routes

Questions about Section 1256

If the venue publishes no price for that day, the position stays off Form 6781 rather than being valued at a guess. It is reported when it closes.

See your year under Section 1256.

Connect free. Pay when you get your forms.

Get startedBook a call

Free to connect and estimate. Forms from $59.