### Question
Can you define what net section 1256 contracts loss means?


### Answer
**Net section 1256 contracts loss** is defined as the following in *26 U.S.C. § 1212*:

> the lesser of—


(A) the net capital loss for the taxable year determined by taking into account only gains and losses from section 1256 contracts, or


(B) the sum of the amounts which, but for paragraph (6)(A), would be treated as capital losses in the succeeding taxable year under subparagraphs (A) and (B) of subsection (b)(1)

#### Citation:
  - *26 U.S.C. § 1212*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter P-Capital Gains and Losses > PART II-TREATMENT OF CAPITAL LOSSES**

