I am not a trader and traded a few Vertical and Iron Condors. For 1099-Capital Gains Tax reporting there is no specific help regarding these strategies. Can someone help me to report these in my Tax form. I donât want to waste money by going to a CPA (and not sure if he to know about the options strategies) Here are a few dummy trades. 1) Purchased FXI Jan 2009 240/250 Debit Call Spread on Nov-2007 for $3.20 There was some (3:1) spilt in between. So the symbols change. Then, the closed the short side on Oct-2008 for $0.20. The other long side one was let to expire in Jan 2009. So there was a loss of $3.00 (I am not adding commission to make things more complex). 2) Sold Iron Condor ($2.50) and it expires worthless. 3) Sold Iron Condor ($2.00) and brought it back ($9.00). Also, does a wash sale rule apply here and how?
Without going into specifics, I do want to say that each leg is reported separately when closed. That is: Each leg is shown on a separate line of your Schedule D. The exception is when there is an exercise, which is reported as follows: a. Exercise by you of Purchased Call: Premium added to the cost of the underlying which you just purchased. b. Exercise against you of a Sold Call: Premium received is added to the sales price of the underlying which you just sold. c. Exercise by you of a Purchased Put: Premium paid is subtracted from the sales of the underlying which you just sold. d. Exercise against you of of a Sold Put: Premium received is subtracted from your basis of the underlying, which you just purchased. See how simple this is. lol Madam Speaker, where do I go to get stimulated? 4Q - And Harry Reid too.
Thanks for simplyfying. It seems the wash rule does not apply to these simple strategies. One more question, If theres is a spit and symbol change of the option. What should I write in the Desciprtion of the trade to be more clear?
DO NOT use ONLY he option symbol for description. Instead, write: option symbol plus ABC Nov 55 call etc if you owned 10 ABC 90 calls and it split 2 for 1, you would own 20 ABC 45 calls. Report that ABC 45 calls on Schedule D. Your cost basis and date of purchase are as they were when you bot the 10-lot of 90 calls. When you sell, just show the date and net proceeds. If they expire worthless, you 'repurchase' at a price of zero. The date is Sat, one day after expiration Friday. Mark
The wash sale rules in these types of transactions generally do not apply. That's about all I care to say now in a public forum. 4Q
In order to determine if you have wash sales, you need to compare the dates of the transactions that are similar positions to those where your incurred losses. In general you have a wash sale if you sell stock at a loss, and buy substantially identical securities within 30 days before or after the sale. Check out this web site: http://www.fairmark.com/capgain/wash/wsoption.htm