Hi, I have made the Section 475 trader election and mark all open positions to market at year end as if they were sold. I have a question about the treatment of premium income received from an assigned put on shares not sold in the calendar year.
If I write a put, get assigned, then I lower the cost basis of the underlying stock by the amount of the put premium when those shares are sold.
However, if the assigned shares are not sold during the calendar year, I will still make a M2M adjustment at year end based on the market price on 12/31, but do I decrease my cost basis by the put premium received?
The 1099-B doesn't even show the put option transaction as occurring, so I wonder how the IRS will ever reconcile these trades.
Thank you!
