lets say you total sales 100k of stock for 2007, and 100k for options now your broker only reports the stock sales to the irs, so irs knows you had 100k of sales so the irs expects to see 100k of sales on the schedule d now when you report 200k worth of sales for both stocks and options, does that not trigger audit alarms for the irs? since i trade mostly index futures anyway, i think i'll stick to options on futures......that way i get 60/40 tax treatment and one line accounting.
have any options traders ever been audited? it's impossible to cheat on taxes if you trade stocks or futures but on options, you can not report any of your option sales to the the irs and you'd probably have a lower chance of getting audited as long as your stock sales match what the # the broker sent in