topic Short sales of options sold in 2020 and closed by purchase in 2021 in Investors & landlords

Short sales of options sold in 2020 and closed by purchase in 2021

bawe — Sun, 13 Feb 2022 03:54:49 GMT

I am unable to enter short sales transactions because Turbo Tax does not allow me to enter a sales date prior to January 1, 2021.

What good is Turbo Tax if I cannot enter all of my transactions?

Is there a work-around for this, or is Turbo Tax going to update their program?

Am I really the only user who sells short?

Re: Short sales of options sold in 2020 and closed by purchase in 2021

Mike9241 — Sun, 13 Feb 2022 05:17:34 GMT

what version of Turbotax are you using? I have desktop deluxe and have no issue entering an option sale with a sales date in 2020 and a purchase date in 2021.

Re: Short sales of options sold in 2020 and closed by purchase in 2021

fanfare — Sun, 13 Feb 2022 12:11:58 GMT

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.

Note to those for whom it is not obvious: Date Acquired and Date Disposed refer to Columns (b) and (c) on Form 8949 that you will report to the IRS.
Your trade date is the date you closed the position and goes in (b). Settlement date must be calculated taking into account weekends and market holidays.

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.

Re: Short sales of options sold in 2020 and closed by purchase in 2021

bawe — Sun, 13 Feb 2022 17:31:23 GMT

Thank you for your response.

I am using Premier through my Safari browser.

I was unable to just purchase Turbo Tax, as I have done for many years. This year I was required to fill out the tax forms through my browser so that Intuit could try to convince me to upgrade to add professional help, which I don't think I need. Payment for the Premier edition is said to come at the end.

Any idea how I can solve my problem?

I don't know what "desktop deluxe" is, since I have always used Premier.

Re: Short sales of options sold in 2020 and closed by purchase in 2021

bawe — Sun, 13 Feb 2022 17:32:13 GMT

This response is not relevant to my question.

Re: Short sales of options sold in 2020 and closed by purchase in 2021

fanfare — Sun, 13 Feb 2022 18:46:00 GMT

some brokers supply a 1099-B that is not compliant with IRS reporting rules.

Others, like TD Ameritrade, do it correctly.

Which broker are you using ?

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Since option trades are covered transactions,

your category Box A or Box D sales without adjustments do not require Form 8949, so there is no reason to import or key in those transactions.
Instead use the "enter a summary" option to put your numbers on Schedule D Line 1a or Line 8a.

This is the simplest way.

Or should be.

Now there are posts indicating that TurboTax is messing this up also this year.
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Re: Short sales of options sold in 2020 and closed by purchase in 2021

bawe — Sun, 13 Feb 2022 19:33:03 GMT

fan fare

I now understand that the problem was the IRS. not Turbo Tax. TD Ameritrade reported the transactions in accordance with IRS regulations for short sales of options. These regulations, surprisingly, require the broker to report inaccurate sale dates and inaccurate amounts for proceeds and cost. The date closed (purchased) is correct and the amount of gain or loss is correct. Turbo Tax marks these transactions for review, but allows them to go through.

So, all now seems well.

Thank you.