When you sold to open the position, that was the date you acquired the position. And the date the option expired, or you bought to close the position is the date you disposed of the short position. So, enter the date you acquired the position as the "purchase" date, and the date you disposed of the position as the date you "sold" the position. The premium you received for selling the option is your proceeds. If you bought to close the position, that would be your cost. If it expired worthless, the cost basis is zero.
Thanks for helping on this.
However, my brokerage 1099-B reported like this. How should I enter in turbo tax for the same?
box 1b: 05/28/2020 (Date Acquired)
box 1c: 05/14/2020 (Date Sold or Disposed)
The reason for the dates is to determine if you held the investment long term or short term, so just pick dates that are not more than a year apart. In this case you can reverse the dates.
Great. Thanks for helping on this. I can follow your suggestion. Why did turbo tax change this? When I filed taxes for the prior year, this was not an issue. Can Turbo tax fix this so that import from brokerages work effectively?
I agree. This was not a problem in previous years so I do not understand why this was "fixed". I contacted my brokerage (e-trade) and they said the way they report it is correct and turbotax is incorrect. Now I have to "swap" a couple hundred trade dates. Very frustrated and honestly not sure I will continue with Turbotax after the amount of time I need to spend on this. Maybe I can mail it in but that even assumes Turbotax would populate the forms correctly since it won't let me e-file without fixing the dates.
Thanks this is what I was doing. It would be helpful if there was a mass edit feature so you could go through all in a table at once vs. x number of clicks per transaction. I pity anyone with 100s of options.
EDIT: Being sent to first transaction after fixing one, only to have to click to the last page feels like a waste of time. I have to think some unlucky soul will have to attempt to explain why their return does not match their 1099B from Etrade.
Greetings from the future!
THEY STILL HAVEN'T FIXED IT IN 2022.
Did you sell covered calls this year? Go to some other tax software instead, or enjoy a couple hours of clicking through every call you sold.
THIS IS NOT A REPLY TO you dampersand, but more of a comment for TURBOTAX.
It does appear that you can override the issue this year. It tells me that I have to review 339 things and that it won't take too long, then I go and do one (watch the spinning wheel for a while) and it produces a checkbox near the sold date with an X in it. I clicked that and continued and now I only have 338 things to review.
I wish there was a way to IGNORE that sort of error. We know it is there, we also know the IRS doesn't care and our brokers are going to always put the date sold as the earlier date in a SELL to OPEN transaction and the later date as the BUY to CLOSE transaction since that is what in fact happens.
So someone at TURBOTAX needs to get on board here or HR BLOCK is going to start to get a lot of business. Do you have any idea how many short PUTS and CALLS are transacted every single day? I have no money and I did 339 of them. We use this product to make our lives easier not harder, get back on track here.
Same here. Why did they change the algorithm? Now I need to enter into all the 150 option selling operations just to see the message "Date acquired is after date sold" and ignore it.
TT it would be great if you fix or make an easy button to ignore all at once.
It is just ridiculous this still remains a problem. I do appreciate the feedback from the TT Expert where you can just enter the dates in the order that TT accepts, but where is the convenience of being able to import all of your trades. Look if you just have a few options trade, sure manual entry seems fine. Try hundreds of trades of opening and closing short and long positions. I can't keep getting frustrated over TT not allowing an IGNORE all for this "error". This is my last year for TT until this is resolved.
Hi
what you said is not correct,
Please refer to IRS PUB 550 for how to report on 8949
Quote:
"If an option that was granted (written) expired, enter the expiration date in column (b) 'Date acquired ' and enter “Expired” in column (e) 'Cost or other basis.'. Fill in the other columns as appropriate."
based on above IRS note, for selling a option and it expired, acquired date is expiration date not the date you sold to open the position.
TT made the change since 2020 tax report , and it is still a issue in 2021 tax reporting, which is a headache for people to manually correct this false alert , which could be hundreds of expired option . please fix this issue and make it correct and matching what broker 1099b info that get imported...
It is pretty obvious TT doesn't know or doesn't care enough to fix this issue. I wonder what provoked them to put in the date edit and it couldn't be that difficult to remove. As noted, it removes the benefit of being able to import your trades if you have to spend hours flipping the buy and sell dates. I've used TT online for 10+ years but considering a switch if this isn't resolved...but like the idea that my previous year return is pulled in and would prefer not to start over with another package. That said, anyone researched other packages and have recommendations?
Why don't you complain to your broker for supplying you an incorrect form 1099-B ?
For instance, TD Ameritrade and Schwab know that Date Disposed must be on or after Date Acquired.
Hi Fanfare
I took a look with my TD 1099-B.
TD is not setting date correct, I will also complaint to TD as well. TD just simply make sold date same as acquire date in case of like covered call or Orr her short option case, that apparently is not correct based on IRS instruction, sold/acquire date is not same day .
for TT side, I think if it can’t handle it automatically , at least give user a one click button to ignore such sold/acquire warnings instead of click hundreds of covered call one by one to ignore such warning.
Hi Geemonee
you don’t need to fix but just can ignore such need to review warnings after you import 1099B from broker , just keep click continue and TT will allow such acquire is latter than sold date issues , it won’t block you filing later.
The 1099-B specifically uses the words Acquired and Sold respectively in boxes 1b and 1c. For column b of form 8949 Date Acquired, the it's is quite specific here about short sales, "For a short sale, enter the date you acquired the property delivered to the broker or lender to close the short sale." (irs.gov/instructions/i8949).
For column c, Date Sold or Disposed of the wording here is also specific, "For a short sale, enter the date you delivered the property to the broker or lender to close the short sale."
I have to tell you, I am not sure what any of that means when the property isn't property but a contract obligation, but I am guessing that those are the same date.
So E*trade and Robinhood report the transactions which may be wrong. The correct thing appears to provide only the one date in both boxes; the closing date.
Still doesn't help my situation does it? It doesn't matter who is right. TT needs to help us. Either by helping to institute a change at E*trade or accepting that their entries are incorrect, yet correctable and inconsequential. I don't need to be reminded 339 times that E*trade is wrong and Intuit is right. I need Intuit to fill out my 8489 automatically. E*trade and Intuit are at an impasse and we all are caught in the crossfire. So I guess I need access to an editable 8489 so I can make these changes. Let's hope TT allows that, probably doesn't.
I came here searching for answers cause I'm/was running into this same issue (option trades). I read your answer and thought that made sense: Just for clarity, it gives me a list of items to review; I click review, shows all the info imported from E-Trade and it is correct. Though, "What type of investment...": Stock (non-employee) is selected. And I am not changing this selection, everything else matches 1099. Click Continue, then the error indicator comes up "Date acquired is after date sold" with x. I click the "x" (essentially ignoring the error), click continue, then Turbo Tax list the "these situations apply" question, I choose the 7th "none of these apply". Spins for a second and shows "done" and disappears from my review list. This is crazy...hopefully, this is okay...
When you close a short, the correct Date Acquired is the date you closed the trade.
For options, Date Disposed is one business day later. Stock settles in two business days.
If you have a profit, Date Disposed is the same as Date Acquired.
Some brokers report this correctly, some do not.
As far as dates go, TD Ameritrade is one of the brokers that supplies a correct 1099-B in compliance with the IRS reporting rules in the IRS Publications.
The correct solution is to use aggregation aka enter a summary.
TurboTax Online will ask you for a PDF copy of your consolidated 1099-B,
so no mailing is necessary.
Otherwise, mail the transaction details to the IRS within three business days of IRS accepting your e-Filed tax return.
--
Detail Reporting Exception: if you summarize Category A or Category D, Form 8949 is not needed for transactions without adjustments. No mailing is necessary. No attachment is necessary.
Hi aataxes,
yeah, like you said, that "short sale" is not for options but more for like short stocks...
for example, if you write a call option for strike price $100, and when expire date reach, stock price is $90, then you dont need to "buy" another option to broker/lender to "close" your option,
same for buying a call option and expired with strike price higher than stock price.
reporting of long/short options should refer to IRS pub550, unfortunately , there it only says, if you write a option, acquire date = closing date/expire date, if you buy a option then disposition date = closing date/expire date. But it does not clearly saying when write a option what should you do with deposition date , it suggest write a "expire" as deposition date in case of write a call and the call expires. So in theory, 8949 column C deposition even could dont have a date but just word "expire", and I really think TT should have a better way to allow user ignore deposition date is earlier than aquire date as long as user know these info are auto-imported from 1099b and are matching 1099b.
Bottom line, matching 1099B info is more important and I dont think it is wrong to have sold date earlier than aquire date in case of writing option on 8949, and you can force TT to ignore these warnings by just continue to next step on TT, as long as you are sure all info is matching your 1099B.
Sky5 I agree. Those suggestions match some others I found. Thanks.
Fanfare. Your suggestion is also thorough and correct. I did this last year. However it is important to report box A entries with adjustments in form 8949.
It turns out if you purchase TT Deluxe desktop edition instead of using the online forms, it does this for you and allows for edits of the form directly that are easier to make. Forget the online version if you have lots of entries to make.
I have sent messages to E-Trade and Robinhood asking them to clarify there choice of filling out the form as they do... we'll see if they respond.
I ended up using TT Deluxe desktop instead of online edition, it handles everything more transparently. Probably because you pay up front a bit.
Wire1
This should suffice since the IRS only looks at the disposition date. However the correct thing to do would be to make the dates the same or possibly one day later as one comment below suggests.
I ended up using TT Deluxe desktop edition and the process was more automatic. To be clear. The version of TT Deluxe that you download and install on the PC.