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Level 1

Reporting covered call option transactions

How are sales proceeds and cost basis entered since both are negative dollar amounts (TT doesn't allow for a negative cost basis to be enterered? 

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Level 15

Reporting covered call option transactions

Option write, expires:
Since you are short,
The acquired date is the date you closed the short sale or it expired.
 Date Disposed is one business day after Date Acquired (options settle in one day)

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IRS says: Enter "Expired" in 8949 column e) cost, but Turbo Tax won't let you do that directly so you have to go through the "Add More Details" screen and select "Expired". Last I tried, this had no effect either.

I add "Expired" in the description.
Your gain is the amount you received and it is a Short Term Capital Gain. Always.

If you are a covered short or not it doesn't matter.

View solution in original post

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Expert Alumni

Reporting covered call option transactions

The sales proceeds is actually the selling price for the Call option (should be a positive number).

 

The cost basis is the original purchase price upon acquisition. 

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New Member

Reporting covered call option transactions

My broker (eTrade) sent me a 1099 with net trade amount as proceeds for options trades.  This is how they said the IRS wanted it reported. it was a change this year.  TurboTax will not allow entry of a negative proceeds.  Will TurboTax be fixing or do I enter buys and sells, but if I do that, is there an audit risk since it does not match the 1099.

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Expert Alumni

Reporting covered call option transactions

As long as the net from your buy and sell entry equals the net on the 1099 all will be good.  

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New Member

Reporting covered call option transactions

I sold the call  it expired

 

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Employee Tax Expert

Reporting covered call option transactions

To report an expired covered call transaction, enter the money received under Sales. Your Cost will be zero. And it is most likely a short-term transaction (less than one year between the sale and the expiration dates).

Highlighted
Level 15

Reporting covered call option transactions

Option write, expires:
Since you are short,
The acquired date is the date you closed the short sale or it expired.
 Date Disposed is one business day after Date Acquired (options settle in one day)

--

IRS says: Enter "Expired" in 8949 column e) cost, but Turbo Tax won't let you do that directly so you have to go through the "Add More Details" screen and select "Expired". Last I tried, this had no effect either.

I add "Expired" in the description.
Your gain is the amount you received and it is a Short Term Capital Gain. Always.

If you are a covered short or not it doesn't matter.

View solution in original post

Highlighted
Level 1

Reporting covered call option transactions

Thanks - that's how I wound up handling the items.