Question on reporting selling put and call options

[fanfare]

@stephaneich 

Your 1099-B conforms to the IRS reporting rules for short sales.

You are acquiring a security to close your short position.

That happens on the date you close the trade and that is Date Acquired.

The security purchased, an option, settles one business day later. That is the Date Disposed.

Your 1099-B probably shows both dates the same.

The day you entered into the short position is irrelevant.

[satishp]

@fanfare I am having the exact same problem when I import transaction from etrade into Turbotax. The way etrde lists the short positions are 

- Date Sold: The day on which the option is sold short

- Date Acquired: The day on which the short position is closed

- Cost Basis: 0

- Proceeds: $$

- Type: Stock (non employee).

As listed by many here, once i flip the type to option, there are 2 radio buttons (sold or expired) that appears, and when I choose, expired the proceeds become hidden and this poses a problem to reflect the transaction correctly. So I am keeping the type as stock only without changing it as option. But the Needs Review button appears which flags that Date acquired cant be later than Date sold. So Do I need to flip these dates to fix the issue? Pls advise

[fanfare]

If you closed the trade then EXPIRED would be incorrect.

If the option expired, enter that date for Date Acquired.

see my post above for how to report a short sale correctly.

It doesn't matter if it is a stock or an option.

Stocks settle in two business days.

[crsimon53]

I'm still confused and I don't remember this being a problem last year.  TurboTax needs to give us the proper way to get out of this problem.  I am concerned that if I do a work around it will result in a problem somewhere else.  The issue is this:  our 1099B lists whether an option is sold or expired.  When you enter the option  as expired, the proceeds from the sold call or put disappear.  Obviously this is not correct.  So what do we do to solve this?  List it as a stock and then list the proceeds?  Is this the correct way to handle?  

[dumrinda]

I selected the "Sold" checkbox and appended the description with (Expired call). This is the first year I had options, so I can't speak on the previous year's TT experience.

[fanfare]

@crsimon53 

this thread is mingling two separate issues and ways to address them

TurboTax has never handled the "EXPIRED" indicator correctly,

So yes, you may enter it as a stock if you are entering the transactions yourself.

Enter a meaningful description i. e. "27 Oct AAPL Option" .

I  add the keyword "(S)"  for short and/or "EXPIRED" as appropriate.

As I recall TurboTax will squish in a pretty long description.

[kburnsvegas]

@stephaneich,

I also have TD Ameritrade, and have sold (short) a few options (naked) in 2020, which then expired.

In reading the instructions on the "Proceeds from Broker and Barter Exchange Transactions" section of the TD Ameritrade 1099-B - I see this:

"Long positions are reported based on the trade date and short positions are reported based on the settlement date of the trade."

In TurboTax - I'm going to update all my sold (short) options that needed review as:

Sales Info -> Type: Options (have to manually change this)

Date Acquired (no change) and Date Sold / Disposed of: The expiration date, which TD reported on the form, and is already filled in correctly as the settlement date

Sold or Expired: Sold (I have to select this) - Like others have posted in this thread - cannot chose expired because it zeros out the proceeds/gains.  If TT had an option for short vs. long on options - then they could make Sold vs. Expired work correctly - but sold seems to work to match up the gains.

Everything else I'm leaving as imported.  So basically I'm only changing the type, and choosing Sold, then moving on.  Hope it works, seems to reflect the detail reported on the 1099-B.

Thanks,

Kevin

[g3srinivas]

Thanks, Kevin. Following the same.

[chandra125]

I made the same mistake of picking 'expired' and saw my tax liability go down ( refund increased ). How do I correct the ones I already reviewed wrongly?

[BKS1]

Is it LTCG or STCG (long or short term capital gain)?     I sold a covered call option and the term was for about 14 months. It expired worthless.  Do you know how TurboTax handles this?There seems to be some confusion on how the short call should be reported.  Some sites say LT, others say all covered call options sold short would be STCG.  IRS guidelines not clear either.

[fanfare]

The IRS is clear.

the gain on a short is always a short term capital gain.

The date you entered into the position is irrelevant.

In order to close a short you must go to the market and acquire some securities, in this case, some options.

The acquired date is the date you closed the short sale.
For Stocks, the disposed date is two business days later (settlement).
Options settle in one day.

If you have a gain, Date Disposed is the same date.

If an option that was granted (written) expired, enter the expiration date in column (b) and enter “Expired” in column (e).

From this you can see that a short is always a short term capital gain or loss, no matter how long you are short.

[fanfare]

Note; some brokers will give you a correct 1099-B abiding by the IRS rules,

and some will not.

It's your responsibility to report correctly.

[Larrystephb]

All my options sells (put or calls) transfer over from the financial institution to TurboTax as stock employee options. I have to go back & manually change hundreds of these to options. Also when you sell an option and the cost basis shows zero the the proceeds shows the amount received TurboTax does not know how to handle these transactions. The review flags hundreds of these. I need to switch to a different program or stop selling options.

[Larrystephb]

This is what I have to do but unfortunately there are hundreds. I use the phone version of the app, if using a laptop is there a mass change option? Because of this I must stop using TurboTax. I also usually buy the options back to close so it will have a dollar it two as the cost basis instead of zero to save me from manually changing back.

[fanfare]

@Larrystephb 

why don't you summarize your option trades and other stock trades on Schedule D Line 1a ??

Any reason ??

They are all covered transactions so no detail reporting is required.

-

Yes, if you have wash sales, it gets more complicated since those adjusted transactions have to be itemized on Form 8949 and the summary totals adjusted accordingly.

You can take action to avoid wash sales.