Do I need to calculate wash sale for options or should I report my 1099B as is & let the IRS work their magic?

[jjiang2016]

Hi, it's my first time filing taxes and I will be using Turbotax online. My wash sales for options all began September and fully closed before October (did not buy stocks with same ticker in that year).

If I must calculate myself, can someone please help? (The fact that some of these trades occured on the same day is confusing)

09/11/17 Bought/Open 10 TSLA Sep 15 $360 Put(TSLA) @ $5.55   -5,560.15

09/11/17 Sold/Close    10 TSLA Sep 15 $360 Put(TSLA) @ $6.00   5,989.71

09/11/17 Bought/Open 2 TSLA Sep 15 $355 Put(TSLA) @ $4.85    -975.99

09/11/17 Bought/Open 5 TSLA Sep 15 $360 Put(TSLA) @ $5.50     -2,757.55

09/12/17 Sold/Close 2 TSLA Sep 15 $355 Put(TSLA) @ $2.30         453.99

09/12/17 Sold/Close 5 TSLA Sep 15 $360 Put(TSLA) @ $3.80         1,892.40

Not sure if there is a wash sale here (different blocks), but please help calculate if there is.

09/11/17 Bought/Open 20 GPRO Sep 15 $10.50 Put(GPRO) @ $0.26     -535.35

09/11/17 Bought/Open 30 GPRO Sep 15 $10.50 Put(GPRO) @ $0.18    -560.55

09/11/17 Sold/Close 50 GPRO Sep 15 $10.50 Put(GPRO) @ $0.10        469.02

Thanks in advance!

[maglib]

Since all your positions were closed by October, you won't bottom line have wash sales to worry about as even adjusting cost basis of new shares, it won't matter as you closed all positions and did not buy any other assets or short within 31 days.  The IRS allows you to not report every trade, you can choose various as purchase date and as long as you report them as ST  LT buckets and correct proceeds, you will have met IRS needs.  Seems all your trades are ST.

do note the IRS also considers substantially identical in considering wash sales rules so it does not have to be the exact same stock.  A wash sale occurs when an investor sells an asset at a loss and, within 30 days, acquires "substantially identical" property.  The loss is then not deductible and instead increases the basis in the acquired assets.

In a put sale, the government will declare a wash sale when the put position is substantially identical to the stock – that is, when there is a high likelihood that the put will be exercised.  If selling out of the money puts, normally they would have no wash sales but the closer to being in the money, the more likely the IRS will trigger wash sale rules.

if a put is exercised and the buyer owned substantially identical securities, the put's premiums and commissions are added to the cost basis of the shares/ subtracted from the selling price upon exercise. The position's elapsed time begins from when the shares were originally purchased to when the put was exercised (shares were sold). If a put is exercised without prior ownership of the underlying stock, similar tax rules to a short sale are applied, with the total time period ranging from exercise date to closing/ covering the position.

[jjiang2016]

Thanks! I would recommend your answer but there seems to be a problem as that option is not available for your comment.

[jjiang2016]

Update: I just saw this on Greentradertax.com (quite reputable amongst day traders)

Can I rely on my 1099-B for reporting wash sale loss adjustments?
Only if you have one brokerage account trading equities. If you trade stocks and stock options, or just stock options and/or have multiple brokerage accounts, you can’t rely on brokerage firm Form 1099-Bs for reporting wash sale losses correctly because there will be differences in application of taxpayer rules on substantially identical positions.

Are options subject to cost-basis reporting and wash sale loss adjustments?
Yes, IRS cost-basis reporting rules phased-in options purchased on or after Jan. 1, 2014. Brokers won’t report a wash sale loss between a stock and an option, but taxpayers must do so. Options at different expiration dates have different symbols, so they are considered substantially identical.

[maglib]

yes, very true but as you said, you sold all the positions in Oct and didn't buy any stocks or options after so the net impact of any wash sales during the year would have basically washed themselves out. No broker can report wash sales accurately if you have multiple trading accounts.  When a wash sale loss happens, it just impacts the cost basis of new trades within 31 days so ultimately you sold everything so moving cost basis bottom line impact will be $0 on your net gains/losses for the year.

[TomYoung · Accepted solution]

As others have said, the broker is support to report on the 1099-B wash sale losses that they are aware of.  I take it that they did not report any wash sale losses.  If these are all your option trades in these companies in all your account I can't see that you have any wash sale losses.

Report the trades to the IRS as they've been reported to you.

Tom Young

[jjiang2016]

Thanks for your help!

[jjiang2016]

Update: I just saw this on Greentradertax.com (quite reputable amongst day traders)

Can I rely on my 1099-B for reporting wash sale loss adjustments?
Only if you have one brokerage account trading equities. If you trade stocks and stock options, or just stock options and/or have multiple brokerage accounts, you can’t rely on brokerage firm Form 1099-Bs for reporting wash sale losses correctly because there will be differences in application of taxpayer rules on substantially identical positions.

Are options subject to cost-basis reporting and wash sale loss adjustments?
Yes, IRS cost-basis reporting rules phased-in options purchased on or after Jan. 1, 2014. Brokers won’t report a wash sale loss between a stock and an option, but taxpayers must do so. Options at different expiration dates have different symbols, so they are considered substantially identical.

From this, I assume that my broker (etrade) won't report wash sales for options or options with different expiration dates (not required to)?

[TomYoung]

I don't think that assumption is entirely correct.  I think the issue comes down to the interpretation of "substantial identical positions", which isn't rigorously defined.

[fanfare]

your consolidated 1099-B will list the wash sales.(Your broker is required to do that).

List them separately (they have adjustments)

It is a tedious matter to separate the totals from the other transactions' totals. The other transactions (without adjustments) can be summarized on Sched D line 1a.(no 8949 needed)

[maglib]

all positions were closed in Oct. No need to report wash sales as they would have just adjusted basis that was then sold... Can't he just report totals then?

[jjiang2016]

Thanks for your help!

[jjiang2016]

Update: I just saw this on Greentradertax.com (quite reputable amongst day traders) Can I rely on my 1099-B for reporting wash sale loss adjustments? Only if you have one brokerage account trading equities. If you trade stocks and stock options, or just stock options and/or have multiple brokerage accounts, you can’t rely on brokerage firm Form 1099-Bs for reporting wash sale losses correctly because there will be differences in application of taxpayer rules on substantially identical positions. Are options subject to cost-basis reporting and wash sale loss adjustments? Yes, IRS cost-basis reporting rules phased-in options purchased on or after Jan. 1, 2014. Brokers won’t report a wash sale loss between a stock and an option, but taxpayers must do so. Options at different expiration dates have different symbols, so they are considered substantially identical.