Message Font: Serif | Sans-Serif
No. of Recommendations: 0
Dear Tax Fools:

I'd really appreciate your help with this date-related tax question.

In 2014, I opened a short call position as part of an options position.

On Friday, December 26, 2014, I was assigned on that short call, putting me in the position of being short the stock. That was a Friday, and I was not informed of that assignment until after the market closed and thus could not do anything about it until the next Monday.

On Monday, December 29, 2014 -- the first day I was able to do anything about it, I closed the short stock position by buying back the shares. Closing the position resulted in a net loss. That closing trade did not settle until Friday, January 2, 2015.

While the trade date was in 2014, the settlement date was in 2015. My broker's tax reporting tools and 1099 forms are indicating that I should include the transaction with my tax year 2015 taxes (not 2014), but I've always been under the impression that it's the trade date, not the settlement date that matters.

In reading IRS publication 550 ( ), I can't find any clear statement pointing to the settlement date being the one that matters. This Fairmark article: indicates that if you're closing a short sale at a loss, it's the settlement date that matters.

My broker's tax reporting is currently consistent with the Fairmark article and is suggesting I do not report the closed transaction until I file my 2015 taxes in 2016. I called the broker's customer support on this, and they couldn't figure out which was right.

From a dollars and cents perspective, I can deal with either one, but I would like to report the transaction correctly with the IRS and the state house.

Your guidance would be much, much appreciated.

Best regards,
Inside Value Home Fool
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.