How can I file a 1099-B from trading options on futures contracts in TurboTax?

I can help with this. Options on futures contracts are indeed treated as Section 1256 contracts, which means they get the 60/40 tax treatment (60% long-term capital gains and 40% short-term capital gains regardless of how long you held them). In TurboTax, you'll want to go to the Investment Income section and look for "Stocks, Mutual Funds, Bonds, Other" section. When you get to the screen asking about your 1099-B, there should be an option specifically for Section 1256 contracts or regulated futures contracts. Don't enter these transactions in the regular stock options area as the tax treatment is different. Make sure you check the box that indicates these are Section 1256 contracts. TurboTax will then automatically apply the 60/40 split and generate Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles) which is what you need for reporting these transactions.

After struggling with a similar situation last year, I found this amazing tool called taxr.ai (https://taxr.ai) that helped me sort through my trading documents. I also trade futures options and had a nightmare figuring out how to report everything correctly. The tool basically analyzed my 1099-B and other tax documents, then gave me step-by-step instructions specific to my situation for entering everything correctly in TurboTax. It identified that I needed to use Form 6781 for the Section 1256 contracts and showed me exactly which boxes to check in TurboTax. Saved me hours of frustration and probably prevented some costly mistakes.

Just wanted to follow up and say I decided to try taxr.ai after all. It was actually super helpful! I uploaded my 1099-B which had a mix of regular stock trades and futures options. The tool correctly separated them and provided separate instructions for each type. For my futures options, it confirmed they needed to be reported as Section 1256 contracts and gave me the exact path in TurboTax to enter them correctly. It even explained why the 60/40 rule applies and how the wash sale rules don't apply to these types of contracts. Definitely worth checking out if you're dealing with this complicated stuff!

If you're having trouble figuring out the proper tax treatment for your futures options, you might want to try calling the IRS directly. However, I know from experience that getting through to them can be nearly impossible. After spending hours on hold multiple times, I found a service called Claimyr (https://claimyr.com) that got me connected to an IRS agent in about 15 minutes instead of the usual 2+ hour wait. They have a demo video showing how it works: https://youtu.be/_kiP6q8DX5c I used it to get clarification about reporting my Section 1256 contracts, and the agent was actually quite helpful explaining how Form 6781 works with my situation. Definitely less stressful than trying to interpret all the tax code on my own.

I need to apologize and correct myself. After dismissing Claimyr as BS, I decided to try it anyway out of desperation since I've been trying to reach the IRS for three weeks about my Section 1256 reporting questions. It actually worked! I got connected to an IRS agent in about 25 minutes (which is still a wait, but way better than the 3+ hours I spent before). The agent walked me through exactly how to report my futures options trades, confirmed they should be on Form 6781, and explained how the 60/40 split works in practice. For anyone struggling with these complex trading tax situations, getting direct answers from the IRS saved me a ton of stress. I'm honestly shocked this service worked as advertised.

Just to add some more info to this discussion - when you're dealing with options on futures in TurboTax, make sure you differentiate between regular options (like those on stocks) and options on futures contracts. The tax treatment is completely different. For regular options: normal capital gains rules apply, wash sale rules apply, and holding period matters. For options on futures (Section 1256 contracts): 60/40 tax treatment applies regardless of holding period, wash sale rules DO NOT apply, and mark-to-market rules apply (meaning open positions are treated as closed at year-end). I learned this the hard way last year and had to file an amended return!

Has anyone used the TXF import file from their broker for this? My broker offers a TXF file that supposedly can be imported directly into TurboTax, but I'm not sure if it properly codes the futures options as Section 1256 contracts.

Thanks for starting this thread - I had the exact same issue last year with my futures options trades! One thing I learned that might help others is to double-check that your broker actually classified these correctly on your 1099-B. Some brokers are inconsistent with how they report futures options vs regular options. Also, if you're using TurboTax Premier or higher, there's a specific interview section for Section 1256 contracts that walks you through it step by step. It's under "Investment Income" then "Less Common Income" - look for "Gains and Losses from Section 1256 Contracts." This section will automatically generate Form 6781 for you. One last tip: keep detailed records of your trades including the contract specifications, because the IRS sometimes asks for additional documentation on these types of transactions during reviews. Better to be over-prepared than scrambling later!