ETF options taxes

Discussion in 'ETFs' started by pkts, Mar 28, 2007.

  1. pkts


    Sorry if this is in the wrong place

    What are ETF Options classified at now (for tax reasons)? Robert Green at Green Company says its up in the air and could go either way. I can't find any decisive information though it seems to be leading towards being treated as a security and thus on the Schedule D versus being a 1256 contract.

    However, I use Gainskeeper and they are now counting my ETF options as 1256 contracts saying that they are index options (even though they are ETF options). 1256 contracts are supposed to be non-equity options (cash settled) but ETF options settle to ETFs (equity). How can they be considered 1256 contracts?

    The best part is that when I ran my taxes in mid Feb, Gainskeeper did not say there were any 1256 contracts and now, in late March, it calls them 1256 contracts! The same contracts were not 1256 contracts in tax year 2005! Did the IRS issue some decision recently???

    Thanks for any help!

  2. Jreality


    I have ThinkorSwim and as a TOS customer I get access to a free Gainskeeper report. In my 2010 report, and they count my QQQQ options as short-term. They do NOT treat them as 60/40. Does everyone else find this to be true on TOS for SPY and QQQQ options?
  3. That is incorrect, 1256 is for non equity options. Gainskeeper is in error.

    Who ever is your tax advisor, get a new one since it is cut and dry what 1256 covers.

    And selling or buying options based on ETFs (equity options) are done on the schedule D