I have already pulled all data from my Fidelity and TD Ameritrade accounts, but Turbo Tax asks me if i traded straddles? and as per IRS rules all multi-leg trades which have opposing/counter balancing trades are called straddles. These include, Straddles, strangles, Vertical Call spreads (bought or sold), Vertical Put Spreads (bought or sold) etc I have done all above, but they were not against any long or short stock, i did not held any stock for these securities.
Use Form 6781 only for futures contracts, options on futures, or FOREX currency that you have elected to treat under section 1256. Even then you are not a Professional , so you would not check any boxes except perhaps D if that applies. You don't want that one to be applicable.
what tax document do you have?
consolidated 1099-B? or substitute 1099-B for Futures and FOREX?
since you mentioned " no stock" I guess you are trading stock options.
Its consolidated 1099.. doesn't say B, not for Futures or Forex.
Yes these were stock options trade using strangles, straddles and vertical spreads.
you are not a professional engaged in hedging operations.
your option trades are covered transactions.
I recommend the summary reporting option since covered transactions do not require Form 8949. No mailing is necessary.
Thanks Fanfare, but should i select Straddles on turbo tax? and what i need to elect after that? See my possible elections in attached pictures. See following Qs:
1. As per IRS form 6781, the selections i make this year will be permanent (can only be changed after contacting IRS). So i need to be sure what i am electing based on my trading style.
2. If i have imported my 1099-B in the tax software here, which includes all trades, why i should go and fill out the straddles again?
3. N what if i may have some missing or unaccounted trades in my form 1099-B. I bought and sold Puts as well, but the form 1099-B only marks trades as Calls (difficult to decipher, trying to figure this out with broker)
4. For year 2021 I am currently trading Cash Covered Puts and Covered Calls. How the elections i will make today will affect my tax filing next year?
Please let me know as much as possible.
Actually the 3rd election is 4th (last election to start entering data).
As I tried to explain, perhaps not too clearly, you don't file Form 6781.
Use Form 6781 only for futures contracts, options on futures, or FOREX currency that you have elected to treat under section 1256. Even then you are not a Professional , so you would not check any boxes except perhaps D if that applies. You don't want that one to be applicable.
Hi Fanfare, you mean "Unrecognized gains from positions held on December 31st 2020"??, Yes i have 1 Vertical Call Spread on options, which i sold in 2021 (so i will need to fill in this table, see picture) and select no other elections?? basically skipping all the steps i mentioned earlier in pictures. Right?