So this question may be outside the scope of this forum, but figured it's worth a shot.
In 2019, I began trading options (only writing covered calls and cash-secured puts). My first trade was a covered call against an EFT position I had held since 2016. On my 1099-B from TD, I see this options trade listed under "SHORT TERM TRANSACTIONS FOR COVERED TAX LOTS". Makes sense up until here.
But in the next few months (still in 2019), I made some additional option plays. Bought some stock, wrote covered calls against my position, also cash-secured puts -- all trades which I received premium (income) for. However, none of these are listed in the 1099-B, and I'm not fully understanding why. Do I need to report these trades elsewhere manually? Is there a faster, automated way to do this in TurboTax?
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Only closed transactions are reported.
If you have any outstanding option writes at the end of the year, they won't show on your 1099-B
In order to close a short you must go to the market and acquire some securities.
Your trade date is the date you closed the trade and goes in (b). Settlement date must be calculated taking into account market holidays .
The acquired date is the date you closed the short sale.
The disposed date is the very same date if you closed at a profit.
For Stocks, the disposed date is two business days later (settlement) if you closed at a loss.
Note: Date Acquired and Date Disposed refer to Columns (b) and (c) on Form 8949 that you will report to the IRS.
Note:For option short sales with a loss, Date Disposed is one business day after Date Acquired (options settle in one day). But if you have a gain, Date Disposed is equal to Date Acquired.
Option write, expires:
Since you are short, the Date Acquired shows the date of expiration,
Enter "Expired" in 8949 column e) cost, but Turbo Tax won't let you do that directly so
you have to go through the "Add More Details" screen and select "Expired".
Your gain is the amount you received and it is a Short Term Capital Gain.
As an active investor, be aware that your category Box A sales without adjustments do not require Form 8949, so there is no reason to key in or import those transactions.
Instead use the "enter a summary" option to put your numbers on Schedule D Line 1a.
That makes a lot more sense now, thank you! So two examples/clarifying questions:
1) I was short a put and was assigned, therefore having to buy x shares of the stock. I am still holding the stock. Does that mean there are currently no tax consequences for the year 2019, even though I received the option premium in 2019?
2) I went short a call near the end of 2019, collecting premium. However, the call expired in 2020. Does that mean there are no tax consequences in 2019, and this would instead be reported on 2020 taxes?
Refer to IRS Pub 550:
Writers of puts and calls. If you write (grant) a put or a call, do not include the amount you receive for writing it in your income at the time of receipt. Carry it in a deferred account until:
Your obligation expires;
You buy, in the case of a put, or sell, in the case of a call, the underlying stock when the option is exercised; or
You engage in a closing transaction.
If a put you write is exercised and you buy the underlying stock, decrease your basis in the stock by the amount you received for the put.
Note: your broker will be (or should be) doing these calculations and adjustments for you.
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