Hi All

I've just got my 1099 from my forex broker. There is only one item--the total loss. Where do I put this on my tax form? I read in here that trader can elect between the IRC 1256 or IRC 988. I'm using Turbo Tax and HR Block. How can I do that with either one of these softwares?

Thanks

A forex loss goes on line 21 of Form 1040 - Other Income or Loss.

Unless if you elected out of IRC 988 forex rules on a contemporaneous basis in 2006; in which case the gain or loss goes on Form 6781 like futures.

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But how do I know that I elected out of IRC 988, on a contemporaneous basis or not in 2006? I opened an account and started trading w/o electing anything. The next thing I know is that I get this really simple 1099 form that has only on line---my total loss for the year. Can the IRS figure that out by the fact that I choose to report it as OTHER INCOME?


Thanks for your help

You say you did not elect out of IRC 988 (no elections), so you have ordinary gain or loss treatment on line 21 of Form 1040.

If your broker reported that forex loss like a futures loss on a 1099-B line 11 Aggregate Profit or Loss, then report it first on Form 6781 and then transfer it to line 21 of Form 1040. Explain that in a footnote.

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I have a same situation. The forex broker sent me a 1099-B (aggregate loss in line 11) though I wanted to put my loss ($1300) into "other income(loss)" on 1040. Could you let me know whether i can report it as "other income(loss)" on 1044 WITHOUT a form 6781? or Must i add the form 6781? Please advise me. -Tony-

Suggest you report first on Form 6781 and then transfer to line 21 of 1040 and explain it in a short footnote.

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2006 is my first year trading forex and I'm using the TurboTax for my tax return. I have a loss of $7K on forex and $2K on interest expense. I answered all the questions under the section of contract and straddles IRC 1256 but when I finished only a loss of $3K was reported on line 13 of form 1040 and a schedule D and form 6781 are generated. It this correct? Under TT, it didn’t ask me to elect 988 or not. As you always said, loss and gain should goes on line 21 (my case should all $7K report on line 21?). Can anyone tell me what I did wrong here?

Please help.
Thanks

If you did not elect out of IRC 988, report your forex trading loss on line 21 of Form 1040 as Other Loss.

Don't enter it like a futures contract on Form 6781 unless you elected out of IRC 988.

There is no 3k capital loss limitation on line 21 of Form 1040, whereas there is a capital loss limitation with Form 6781 - which then moves over to Schedule D.

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