Steve Pope <spope33[at]speedymail.org> wrote:
- quote -

I should have written "I write the option for $5, struck
at $50 . . ."

Seth

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DF2 <replyvia[at]newsgroup_please.com> wrote:
- quote -

Oh, okay.

"I write the December $50 calls for $5." That makes sense.
Sorry for being confused.

Steve

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Rich Carreiro <rlcarr[at]animato.arlington.ma.us> wrote:
- quote -

Makes no sense to this options trader. "Write" means sell
to open. After writing a call, that call is short in your
account. You cannot sell it.

Steve

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Steve Pope wrote:
- quote -

for which he charges/receives $5...

- quote -

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spope33[at]speedymail.org (Steve Pope) writes:
- quote -

I'm pretty sure the phrase "I write a naked Dec 06 call at
$50, sell it for $5" means "I write a naked Dec 06 call with
a strike price of $50 and sell that call for $5".

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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Seth Breidbart wrote:

- quote -

I'm confused. If you write an option (which is selling the
option to open), then the mutually exclusive possibilities
are you buy it back, it gets exercised, or it expires. So
what is meant by "sell it for $5" in the above?

Steve

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Seth Breidbart wrote:
- quote -

True. Are you implying that is an analogous situation to
a covered call expiring? If your put *expired*, I think you
would have an analogous situation to the call that expired:
pay for the year of expiry.

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- quote -

Proceeds from option trading are not reported on a 1099-B
period. Put or call, buy or sell, naked or covered, long or
short, you report the trade in the year it closes or
expires. But the broker is not required to issue a 1099-B.

--
Don EA in Upstate NY

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DF2 <replyvia[at]newsgroup_please.com> wrote:
- quote -

Consider the following: I write a naked Dec 06 call at $50,
sell it for $5. It gets exercised, and I go short the stock
to deliver; now I've done a short sale at $55. That gets
reported as information only; there's no tax liability until
I close out the position in a subsequent year.

Seth

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Steve Pope wrote:
- quote -

I believe that you report the call in the year that it expires.
See http://www.irs.gov/publications/p550/ch04.html#d0e12764

Note that the schedule D Date Acquired is the date the
option expires. The Date Sold is the date that you opened
the position.

Sales price is what you received. The Cost (column e) is
"Expired" if you enter fill out the form by hand. On the
computer, enter $0 and hand-write "expired" into the same
box.

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Seth Breidbart <sethb[at]panix.com> wrote:
- quote -

Correct. If I write a put option today that expires in
July, and a seller puts the stock to me in June, and I sell
the stock next year there is nothing reportable in 2006.

Steve

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Steve Pope <spope33[at]speedymail.org> wrote:

- quote -

Even if the option expires this tax year?

In any case, proceeds from ordinary short sales are
reported, even though they aren't _taxable_ until the
position closes out.

- quote -

That's correct.

Seth

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David <quicksailor[at]yahoo.com> wrote:

- quote -

Proceeds from writing options are not reported on a 1099
because they are not reportable until the ensuing position
closes out, which could be in a future tax year.

Report the transaction in a normal fashion; the IRS will
not care that you reported more in proceeds than is shown
on the 1099.

Steve

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joetaxpayer <joetaxpayer[at]nospam.com> writes:

- quote -

How could they? The gain or loss can trivially be changed
by actions you take that the broker could not possibly know
about (like wash sales you caused by trading in a different
account).

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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David wrote:

- quote -

I trade options regularly. During the dotcom bubble, I had a
$50K gain over the year. The IRS was more than happy to take
my money. Even though options aren't reported, I doubt
paying the tax will somehow trigger any flag. Likewise, as
only proceeeds are reported on stock sales, you are trusted
to report the proper cost. I'm surprised that brokers aren't
required to up their record keeping to track both sides of
the transaction, and report the gain or loss to the IRS.

BTW, Honest is good.

JOE

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"David" <quicksailor[at]yahoo.com> writes:

- quote -

No, it won't. The IRS only cares if the sales proceeds on
your return are *less* that what was reported to them. If
what's on your return is *more* than what was reported to
the IRS, they don't care.

- quote -

Just do the honest thing.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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Last year, I wrote a covered call, which is essentially
selling a kind of option. The option expired unexercised.
IRS Publication 550 explains how to report this on my
Schedule D as a short term capital gain. However, my 1099 B
from the stock broker only lists the transaction under the
category "Transactions We Do Not Report to the IRS". So, it
seems that if I am dishonest and don't report it, my
Schedule D proceeds totals will match up with those sent to
the IRS, which will keep them happy. If I am honest and
report it, then my Schdeule D proceeds totals will not match
up with those of the IRS, which will set up a red flag.

I would prefer to do the honest thing. Any idea how I can do
this in a way that won't get the attention of the IRS?

-David Martin, quicksailor[at]yahoo.com

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