Options Trading

[Once a year Accountant]

Hello Turbo Tax Community:

I am hoping someone can answer this question.  My taxes are relatively simple, I own a home and have some investments – very simple.  Last year, however I took some training courses and did a few OPTIONS trading (simple things little Selling Calls, and Selling Puts and a few Spreads) very little monetarily wise as well.  My investment company sent me the typical 1099 forms which included all my gains and losses from all my investments Stocks, and Options trading.  The auto-import feature in Turbo Tax makes things so easy. 

However, this year as I was going through the Turbo Tax interview …. I get to the part in Turbo Tax where it asked …… “do you have gains or losses from CONTRACTS or STRADDLES to Report ?”  .. I was not sure how to proceed.  I know I didn’t do any “Straddle Trades”, but I know “Options” are bought and based on the number of “CONTRACTS” you buy or sell --- so I am not sure if that pertains to me. 

So my question is ----- is there something else I need to report.  All my gains and losses are on my 1099.  I read the Section 1256 that it references but I still can’t figure it out. 

I made an appointment to go see an accountant but I figured I’d ask in this forum to hopefully get some help and potentially save me from paying someone to just tell me “that does not pertain to you”  … pay the secretary at the front desk.  🙂 

Thank you

The Once a Year Accountant 

[Mike9241]

contracts and straddles refer to section 1256 contracts

stock options are not 1256 contracts (unless you're a dealer in them) so if that's the only type of options you traded answer no

A section 1256 contract is any:
• Regulated futures contract,
• Foreign currency contract,
• Nonequity option, (ie not a stock option)
• Dealer equity option, or
• Dealer securities futures contract.
For definitions of these terms and
more details, see section 1256(g) and
Pub. 550.
A section 1256 contract doesn’t include any securities future contract,
option on a securities future contract,
interest rate swap, currency swap, basis
swap, commodity swap, equity swap,
equity index swap, credit default swap,
interest rate cap, interest rate floor, or
similar agreement.

[Once a year Accountant]

Thank Mike --- no I am definitely not a Options Dealer !!!   I kind of figured it wasn't applicable but I just am not familiar with all the jargon and when I saw "Contracts" it made me nervous.  Maybe Turbo Tax should put some clarifying helpful Hint in there like "Regular Options Trading is excluded from this"  or something along those lines. 

Just a thought.  

Thanks again !!! 

[Once a year Accountant]

Just curious ---- but would you get something from your broker that tells you if something is a "1256 Contract" ?