Form 1045 for a net Section 1256 loss: the quick refund application

Only individuals can carry back a Section 1256 loss. Form 6781 says corporations, estates and trusts are not eligible to make the election, and §1212(c) says the same.

The 1045 instructions define a Section 1256 contract by five types: regulated futures, foreign currency contracts, nonequity options, dealer equity options and dealer securities futures. Event contracts are not named. The IRS has issued no guidance on whether event contracts are Section 1256 contracts. For people who file them under Section 1256 because of the 60/40 split, Form 1045 is one of two ways to claim a carryback.

The box D election comes first

The carryback starts on the loss year’s Form 6781, with box D checked and the amount on line 6. Form 1045 then claims the refund it produces. A loss year filed without box D is a different case: no IRS form or instruction says how a late election is made, so that question is unsettled.

The loss goes to the earliest of the three earlier years first, then the next. Each year absorbs no more than its own net Section 1256 gain. How much can go back, and which years have room for it, is in how the net Section 1256 loss carryback works.

One pair of columns per earlier year

Lines 10 to 32 have a pair of columns for each earlier year: before carryback and after carryback. The instructions say to start with the earliest year. Each heading names the year, such as “3rd preceding tax year ended 12/31/2023”.

Line 11: adjusted gross income before and after

The carryback shows up as lower adjusted gross income on line 11. In the worked years, 2024 absorbs $8,000 and 2025 absorbs $12,000. The incomes below are illustrative:

Lines 16 to 32: the tax refigured

Below line 11, each earlier year’s return is worked again at the lower income. That covers deductions and credits tied to income, the net investment income tax and the alternative minimum tax. Line 32 is the decrease in tax for each year. What it comes to depends on each year’s whole return, so this page puts no figure on it.

The instructions say to file Form 1045 within one year after the end of the loss year. It cannot go in before the loss-year return, and it does not go in the same envelope. A federally declared disaster can add time.

The dates by loss year

What the 90 days covers

The IRS acts within 90 days of the later of two dates: the day the complete application is filed, or the last day of the month the loss-year return was due. Under §6411 it checks for omissions and math errors.

A paid refund does not mean the IRS accepted the application. An amount it later finds too high can be billed back like a math error. A 1045 is not a claim for refund, so a disallowed one cannot be taken to court. A timely Form 1040-X can still be filed.

For a Section 1256 loss, the instructions name four kinds of attachment:

• The loss-year return: Form 1040 and its schedules, Schedule D included.
• The loss-year Form 6781: with box D checked and line 6 filled in.
• Each earlier year’s amended Form 6781 and Schedule D: the carryback goes on line 1 of that Form 6781.
• Refigured forms: such as Form 6251, Form 8960 or Form 8962, where the carryback changes them.

The instructions say an application missing a required form may be delayed or disallowed.

The Form 1040-X instructions allow either form for a net Section 1256 loss. The two differ in shape and timing:

A few carrybacks must use Form 1040-X, such as one into a section 965 year or one that releases a foreign tax credit. How amending works year by year is in how to amend a tax return for prediction market losses.

Form 8453-TR, dated December 2025, is new. It lets an applicant file Form 1045 electronically through an e-file provider, and it carries the signature and direct deposit consent. A paper Form 1045 goes to the IRS center listed for your return, in its own envelope.

A venue’s tax form is not where the carryback comes from: the chain starts from the trades, then Form 6781, then Schedule D, then Form 1045. Trades build Form 6781, its line 6 sets the carryback, Schedule D carries the rest, and line 1c of Form 1045 takes the line 6 amount.

Realize builds the loss year’s Form 6781 and shows each year’s net Section 1256 result for the venues you connect. It does not check box D for you, produce Form 1045 or the amended earlier-year forms, or put a dollar figure on the carryback. The line-by-line Form 6781 is in the Form 6781 guide for event contracts.