DEFINITION of Section 1256 Contract. Section 1256 Contract is a type of investment defined by the Internal Revenue Code (IRC) as a regulated futures contract, foreign currency contract, non-equity option, dealer equity option, or dealer securities futures contract. Form Contracts and Straddles 6781 • Regulated futures contract, • Foreign currency contract, • Nonequity option, • Dealer equity option, or • Dealer securities futures contract. For definitions of these terms and more details, see section 1256(g) and Pub. 550. * * * END OF 1099-B STATEMENT (REGULATED FUTURES CONTRACTS) * * * Line 8 - Represents the profit or loss realized on futures and the net premium paid or received for options on futures contracts closed or memo offset in 2013. In this example, Mary Smith realized a loss of ($11,000).