Form 6781 for event contracts: Section 1256 gains and losses

Under §1256(b), a Section 1256 contract is any of these:

• regulated futures contract
• foreign currency contract
• nonequity option
• dealer equity option
• dealer securities futures contract

Swaps are excluded. Section 1256(b)(2)(B) lists nine kinds of swap, cap and floor, and ends with “or similar agreement.”

A regulated futures contract is marked to market for margin and traded on a qualified board or exchange. Section 1256(g)(7) counts a board of trade the CFTC has designated as a contract market. As of October 2026, Kalshi and Polymarket US are designated contract markets. Polymarket’s international site, polymarket.com, is a separate product.

Where event contracts come in

There is no IRS guidance on whether event contracts are Section 1256 contracts. The swap exclusion in §1256(b)(2)(B) is the provision most often cited against it. For people who want to file under Section 1256 because of the 60/40 split, Form 6781 is where the contracts go. The routes are compared on one year in the Section 1256 60/40 guide.

The 60/40 split on Form 6781

Every Section 1256 gain or loss is treated as 60% long-term capital gain or loss and 40% short-term. The holding period does not change it: the form says this applies “regardless of how long the contracts were held.” A contract held for an afternoon gets the same split as one held for a year. The wash sale rules do not apply.

The year-end mark

A Section 1256 contract still held at year end is treated as sold at fair market value on the last business day of the tax year. For 2025 and 2026, that day is December 31. The gain or loss from the mark goes on that year’s Form 6781.

The next sale is measured from the mark, not from the price paid. Publication 550 gives an example. A contract bought for $50,000 is worth $57,000 at year end, so $7,000 of gain is reported that year. It is sold the next year for $56,000, and the loss that year is $1,000: $57,000 less $56,000.

The same mark on an event contract, and where a December 31 price comes from, are in what happens to positions open on December 31.

Under §1256(c)(1), the same rules apply when a contract ends by offsetting, by delivery, by lapse “or otherwise.” A market that resolves ends its contracts.

Each line of Part I does one job. The figures are the illustrative year in the specimen above.

Form 6781 lines 8 and 9 to Schedule D

Line 8 goes to Schedule D line 4, with short-term results. Line 9 goes to Schedule D line 11, with long-term results. The split is taken once, from line 7, not trade by trade. Each line, with a winning and a losing year, is in how to fill out Form 6781 for event contracts.

Boxes 8 to 11 of Form 1099-B

A broker reports Section 1256 contracts in aggregate, not trade by trade. Under the Form 1099-B instructions, box 8 is the profit or loss on contracts closed during the year. Boxes 9 and 10 are the unrealized profit or loss on open contracts at the last two year ends. Box 11 is the aggregate, figured from boxes 8, 9 and 10. The Form 6781 instructions put box 11 of each Form 1099-B on line 1.

When no Form 1099-B covers the contracts

As of October 25, 2026, none of Kalshi, Polymarket US, Robinhood, Coinbase or Novig has published that it sends a Form 1099-B with a box 11 figure for event contracts. Kalshi’s Form 1099-B covers crypto transfers, and its 1099-MISC does not include profits or losses. Robinhood’s Form 1099-B can carry a Section 1256 report for regulated futures and nonequity options. It sends no 1099 for event contracts.

So line 1 is built from the trades. It holds the contracts closed during the year, plus those still open at year end at their mark. The instructions say to list separately each transaction no Form 1099-B covers. Realize does that on a statement attached to the form, one row per account on line 1.

• Part II reports straddles: offsetting positions in actively traded personal property. The instructions leave out a straddle whose positions are all Section 1256 contracts.
• Part III is a memo entry. It lists positions held on the last day of the year that are worth more than their basis. It is not completed in a year with no recognized loss on any position.

A contract marked to market in Part I has no unrecognized gain left in it at year end. Realize does not build Part II or Part III.

Box D is the net section 1256 contracts loss election. An individual with a net Section 1256 loss can elect to carry it back three years, earliest year first. Each year takes no more than its Section 1256 gain, and the carryback cannot create or add to a net operating loss. Corporations, estates and trusts cannot make the election.

The amount carried back goes on line 6. It is claimed on Form 1045 or an amended return, with an amended Form 6781 and Schedule D for the years it reaches. With no Section 1256 gain in those three years, the election has nothing to reach. The limits are in the Section 1256 loss carryback guide.

For an event-contract year filed under Section 1256, the chain is:

• the trades, since no venue sends a box 11 figure
• Form 6781 Part I, with the statement behind line 1
• Schedule D lines 4 and 11
• Form 1040

A carried-back loss adds Form 1045 or Form 1040-X. Form 8275, the IRS disclosure statement, can be attached to describe a position the return takes. Form 8949 is where the same contracts go under the standard capital route, never on both forms.

Realize builds Form 6781 Part I and the statement behind it, for the 2026 filing season. It does not build Schedule D, Parts II and III, Form 1045 or Form 1040-X. Form 6781 can be e-filed: it is on the IRS list of forms accepted with Form 1040. Where it goes in TurboTax, H&R Block, FreeTaxUSA and TaxAct is in the Section 1256 tax software guide.