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Financial Planning / Tax Strategies


Subject:  Options and Taxes Date:  3/13/2010  5:01 PM
Author:  shellbackers Number:  109557 of 131132

(X-post from RYR tax board)

Hey guys,

First time dabbling in options and come tax time lots of headaches. I had a few questions and would be great if any help is forthcoming.
FYI: I am using TurboTax Premier

1) I had written option positions open on 12/31/2009. Do these need to be reported or should I only report them on my 2010 return after they expire?
1a) If I need to report the sales, what do I enter for the purchase information in turboTax??

2) I had written puts that were assigned to me. I was holding the stock as of 12/31/2009. As I understand from Pub 550, I dont have to pay tax on the written puts but my cost basis of the stock gets adjusted.
Do I have to report the Written/Assigned put for 2009 return?
If I do, how do I report it in turboTax without incurring short term gain for the puts?

3) Does rolling covered calls up and out generate a wash sale?
i.e. I wrote a covered call expiring in Dec '09 for $15 strike. Then I bought it back at a loss and wrote another one expiring in Mar '10 for $17 strike. Are these considered substantially identical securities?
My common sense tells me they should. Something I read here led me to believe they are not??

3a) If it is a wash sale, how do I enter it in turbotax?
I tried the following:
Entered the sell date/proceeds as the date I wrote the first (Dec 09) options.
entered the purchase date as the date I closed the position.
Indicated that the sale is a part of wash sale and entered the loss amount.

In this case, what it did is added the loss to my cost basis essentially doubled my loss which is clearly wrong.

So how to do it right? Or should I just be leaving it out completely and only enter it next year?

Hopefully I have expressed myself lucidly. If not please feel free to ask for any clarifications.

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