Reporting covered call transaction without a 1099B form. Provided with a 1042-S form instead with no information about capital gains.

[saulgoodman]

My employer stock and retirement funds are with Fidelity and I've been receiving a 1042-S form for the past 2 years as they considered me to be a non-resident for tax purposes. I've filled out the W9 form to rectify the situation for next year. Unfortunately, in 2022 I also made an option transaction as follows:

• Sold a call contract on 08/24 and received a premium of $22.31
• From this amount, a $5.35 tax was withheld (at a rate of 24% I believe). The rest of the amount was transferred to the cash part of my portfolio
• I bought back the contract on 08/26 for $4.03 and made a net profit of $18.28

This transaction isn't reflected on the 1042-S. Fidelity doesn't seem to have a clue as to whether I'll receive a tax document with this transaction or not. Some representatives think I will receive a grantor letter showing this, while some say the letter won't show this. Some also say that the transaction has not been reported to the IRS and that I won't receive a grantor letter, which seems insane to think about.

My questions are these:

1. What is a grantor letter in this case and does it apply to me? If it does and I receive it, how do I use it to file taxes on TurboTax premium?
2. Can I use my statement for the month of August to file this stock transaction myself? I tried adding the transaction without a 1099-B on TurboTax with a cost basis of $4.03 and gross proceeds of $22.31. The sale date was 08/26 and the buy date was 08/24. I also stated that $5.35 Federal Tax was withheld. I live in WA where I don't have state tax. The August statement shows that tax was withheld and not whether it was state or federal tax. The 1042-S form also has my old address in MA and I suspect that's just an error on their part and that I don't owe any taxes to MA as I didn't even live there during 2022. 1042-S has amounts only on Federal Tax withheld, so I believe I just owe Federal Taxes here. 
3. Can I indicate this as a Short Term covered transaction? I don't know if Fidelity has reported the transaction and the cost basis and it'd be ridiculous if they don't. Will there be a discrepancy if Fidelity doesn't report it?
4. Also, if my way of reporting it is right, will I get an error later as the sale date is before the buy date? I haven't gotten one yet, but if I do, should I flip those dates?
5. Is it valid to report a transaction without a corresponding tax statement that shows it? Can I use TurboTax to file my taxes and do I need to keep a copy of my monthly statements for this purpose?

I know it's a complicated question, but any help would be appreciated. 

@DaveF1006, @DanaB27, @SharonD007, @JohnW152, @tagteam 

[saulgoodman]

Anyone who can help me out here? 

@DaveF1006,  @DanaB27, @SharonD007, @JohnW152, @tagteam tagging people who seem active and/or experts here. 

[GeorgeM777]

Question 1 - Not sure what the grantor trust letter means in connection with your covered call option.  We have seen Grantor Trust Tax letters regarding certain types of investments structured as Trusts, i.e., SPDR Gold Trust and the Grayscale Bitcoin Trust.   With regard to the SPDR and the GBTC, the trust letter explains how investors should report their pro rata share of sales of the underlying asset to pay trust expenses.  However, we are not familiar with the trust letter as it relates to your Fidelity account.

Question 2 - Yes, to report the covered call transaction, refer to your monthly account statement and also your trade confirmation.  Of the two trade documents, the trade confirmation is the more important one as it relates only to a single transaction and "confirms" the transaction with the customer.  However, maintain both documents.

Question 3 - Given the dates of your trades, your covered call is a short-term transaction.  Whether Fidelity reports the transaction as they should or not, you still need to report the transaction.  Their failure to report this transaction should not cause an error with your return.  Rather, your return will be all the more the accurate because you have reported this transaction.

Question 4 - Agreed, if you get an error in TurboTax which indicates something to the effect that your purchase date cannot be later in time than your sell date, then reverse the dates so that your purchase precedes the sale.  It should not matter that the dates are switched.  What matters is that the cost basis is reported correctly, the proceeds are reported correctly, and that the dates are accurate in that the dates reflect the "time period" of this transaction.

Question 5 - Yes, you can, and should, report this transaction even though you do not have an "official" tax reporting statement such as a 1099-B or similar document.  From your post, you seem to have everything you need to report the transaction.  Because it appears you do not have a document that can be uploaded into TurboTax, you will have to manually enter this transaction; however, because it is just one transaction, the process should not be time consuming.  Option trades are usually reported to the IRS--that is basis is reported--but you might want to confirm this fact with Fidelity.  

Yes, do keep your supporting documentation, that is, your monthly account statement, and trade confirmation.  Any other record from Fidelity that shows the transaction should also be maintained.  Assuming you are a resident alien, then yes, you can use TurboTax to prepare your tax return.  For non-resident aliens, TurboTax has partnered with Sprintax, and it is Sprintax that can prepare the tax return for a non-resident alien.  

@saulgoodman  

[saulgoodman]

Thanks, @GeorgeM777 for the response. All said and done, is it weird that a transaction isn't even listed on a tax form? I'm asking this because if it's really unusual for this to happen with a stock transaction, I would go with a tax expert for filing my taxes rather than doing it myself, just in case I get audited or asked questions about it.

[DaveF1006]

Keep in mind, GeorgeM777 suggests reporting this stock transaction so that no penalties or interest will occur just in case if you do receive a tax document late reporting this transaction.  As Enrolled Agents/CPA, we make these suggestions as a cautionary step to avoid any repercussions in the future.