TurboTax does not know how to handle options

[rilandon]

If one sells an option and it expires it has a costs basis of $0 , yet Turbo tax keeps telling me I have an error and have to enter the costs basis..  I know I can force a work around, but this software should be able to understand that there are investments that have a $0 cost.

[M-MTax]

I have no clue as to when, or if, this will be rectified by the developers. I only know it's been happening for quite some time without any sort of resolution.

Unfortunately, even the Experts don't have a good grasp on the issue, posting screenshots that actually highlight the issue as an answer. 

[JohnB5677]

To post a stock or option short sale, you must ignore the Buy-Sell designation.

Navigate to the investment portion of your return

Select the Stock option

Continue through the interview to the stock entry screen.

1. When posting The date this investment was acquired, change acquired to initiated.
2. This would make the sale of a shorted option the earlier date.
3. Even if the option does expire, select Sold
4. Enter the date the option expired or was sold
5. In Proceeds enter the short sale selling price
6. In the cost basis post "0" for excepted, or the cost to repurchase the option.

Continue the interview

[M-MTax]

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@JohnB5677 wrote:

Navigate to the investment portion of your return

Select the Stock option

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Yes, but users get confused because of the "Expired" checkbox. If that box is checked there is no way to enter sales proceeds at the time the option was written (sold) in the program. Users can only enter the basis (which is generally $0).

The developers either need to remove "Expired" entirely OR add a proceeds line to the program. 

[user17757492180]

Yep, agreed that this is not good.

And this isn't some weird exotic option strategy. This is what a large number of people do on a regular basis.

[M-MTax]

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@user17757492180 wrote:

And this isn't some weird exotic option strategy. This is what a large number of people do on a regular basis.

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Exactly! Writing calls, particularly covered, is not really some rare and specialized activity. It's one of the most prevalent of strategies and TurboTax should accommodate these transactions without issue or obfuscation.