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I started buying bull call spreads this summer, and held some through expiration.

For example, I bought 50 Jul '07 120-125's for $2.30 at the end of June, for a total cost basis of $11565.79. In July they expired in the money, so in total I received $5 per call, or $24950.45. This gave a net short term gain of $13384.66, which I'll report on schedule D.

My concern is that since I held them through expiration, when they expired I bought 5000 shares at $120 and sold 5000 shares at $125 to get that $5 total before commission. Because of this, on my 1099-B it lists that I sold 5000 shares for $624970.44

I know I have all the supporting documentation for it, and am reporting it correctly AFAIK. But is there anything that I should do so that my taxes don't get flagged/reviewed, since my reported sale price (~$25k) and the 1099-B reported sale price (~$625k) have such a discrepancy.

I'm not too worried about an audit from this as it should be obvious from seeing that it's a 120-125 spread where the $625k came from, but at the same time I'd prefer to not have a computer flag my taxes for further review.

...or am I just being paranoid.


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