Is it true that the IRS doesn't get any information whatsoever from the broker about our option trades? As a result, the IRS has no information to compare our reported trades with? Then how does the IRS know if we are over or under reporting our capital gains from options (other than indirectly thru interest reported in bank accounts)?
They also do not recieve information from your broker on what you paid for a stock, so just like options it is up to you to tell them of the transaction. You could tell them whatever you want, but I would hate to explain to an examiner during an audit why those option trades on the brokerage statement he is looking at were not reported to the IRS.