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ECODOLA
Returning Member

Call/Put options not closed within current tax year.

How do I report an open short call or put option position in Turbotax? Option was sold in the reporting tax year but not bought back as of year end. What do I enter as date acquired? how can I zero out the transaction for the reporting year?

13 Replies
fanfare
Level 15

Call/Put options not closed within current tax year.

On your tax return, you do not report anything that has not been closed in the tax year.

 

@ECODOLA 

fanfare
Level 15

Call/Put options not closed within current tax year.

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

If you did not have a loss, the disposed date is the same as the acquired date.

 

@ECODOLA 

ECODOLA
Returning Member

Call/Put options not closed within current tax year.

Thank you for your response! Since the short option expires in the following tax year and is not closed yet the P/L is yet to be determined. Is it right to zero the transaction in the current year and determine the P/L the following year? 

fanfare
Level 15

Call/Put options not closed within current tax year.

you should not have to zero out anything because it is not going to show on your consolidated 1099-B.

ECODOLA
Returning Member

Call/Put options not closed within current tax year.

Thank you!

Mike9241
Level 15

Call/Put options not closed within current tax year.

are you a trader that made the475f election or an investor? investor or trader without 475f election reports the full gain or loss in the year the position is closed. a trader with a 475f election reports the unrealized gain or loss every year but the reporting is not done on Schedule D but on form 4797.

Whenever you place an order to buy or sell a security with your broker, there will be a "trade date" and "settlement date" recorded. The trade date, which is the date that the order was executed, is the one that counts for tax purposes. The settlement date is just the date when the cash or securities from the transaction are plunked into your account.

ECODOLA
Returning Member

Call/Put options not closed within current tax year.

I'm have not made a 475f election. Before using Turbotax I did my taxes by hand. The previous times I ran in to this situation I used the following guidelines:

The instructions for Form 8949 direct you to enter the description of property, which can be your stock's ticker symbol, in Column A of Part 1 on the first page of the form. Leave Column B (date acquired) blank, because you have sold, but not yet acquired, the stock. Column C holds the date you sold the shares. Column D is where you'll enter the total sales proceeds.

Column E is for reporting cost or other basis. Leave Columns F and G blank (adjustment to your gain or loss and its associated code) because you have not yet completed this transaction. Subtract the amount in Column E from the amount in Column D and enter this amount in Column H.

You should have received a Form 1099-B reporting gross proceeds from the short sale for the year you opened the short sale.  To balance it out leave the blank entry on the main form and select The cost basis is incorrect or missing on my 1099-B and enter the proceeds number as the cost basis.  This will zero out the transaction.

The problem is Turbotax does not accept these entries.

tagteam
Level 15

Call/Put options not closed within current tax year.


@ECODOLA wrote:

The instructions for Form 8949........Leave Column B (date acquired) blank, because you have sold, but not yet acquired, the stock.


Where do the instructions state to leave that column blank?

 

See https://www.irs.gov/instructions/i8949#en_US_2021_publink59421zd0e1778

fanfare
Level 15

Call/Put options not closed within current tax year.

@tagteam 

 

looks like a quote from TurboTax not the IRS.

ECODOLA
Returning Member

Call/Put options not closed within current tax year.

For date acquire I wrote in open and it was not questioned by IRS when filling out return by hand.

fanfare
Level 15

Call/Put options not closed within current tax year.

@ECODOLA 

How to correctly report a short sale -- ( see above).

 

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 acquired date is the date you closed the position and goes in (b). Settlement date must be calculated taking into account weekends and market holidays.
From this you can see that a short is always a short term capital gain or loss, no matter how long you are short.

tagteam
Level 15

Call/Put options not closed within current tax year.


@fanfare wrote:

@tagteam 

 

looks like a quote from TurboTax not the IRS.


It is possible, but I sincerely doubt that would be the case since the program will not accept the entries as @ECODOLA stated.

tagteam
Level 15

Call/Put options not closed within current tax year.


@ECODOLA wrote:

For date acquire I wrote in open and it was not questioned by IRS when filling out return by hand.


Merely because the IRS never questioned the entry does not necessarily indicate that the entry was correct.

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