Reporting Synthetic Long - Options

[Giants25]

Hi,

In 2019 I opened a synthetic long option position by selling open a Put and then buying a leap long Call.  Both had the same strike price and I paid a small net debit to open the position.  The options expired Jan 2021 above the strike price (i.e. The strike price on the Put and Call was $100 and the stock closed close to $200).  I let the options expire and I was obligated to purchase the stock at $100 as stipulated because I had the long calls.

However, when I received the 1099-B it only shows a gain from the Put that expired in Jan 2021.  Since I took position of the stock and back in 2019 I paid for the long call, I do not believe the gain should be recorded.  But how do I populate the tax forms to properly reflect the transaction.  Because if I remove the Puts from the tax form I will not tie to the 1099-B which I assume will result in a letter from the IRS.

Thank you Michael

[GeorgeM777]

You should include the short put gain on your tax return.  While losses on straddles are generally deferred in that if only one side of a straddle position is closed, any realized losses are generally not deductible until the offsetting position is also closed out, in your case, the short put resulted in a gain. Because of the gain, it was appropriate to include the gain on your 1099-B. 

@Giants25