On Feb 23, 3:26 pm, aloy.par...[at]gmail.com wrote:

- quote -

It seems reasonable. Just to confirm, did you reopen any of the
positions in January?

If you do this frequently, consider electing for trader status

http://www.irs.gov/taxtopics/tc429.html

There is no wash rule to worry about, but all your gains and losses
are short term. You still get to hold stocks for long term gains,
provided you identify them. So I'm thinking, maybe have one account
with all your crazy trading, and another for your few long term
investments, identify them as such.

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I made many covered call stock/option transactions in 2008.
E.g. buying Stock ABC and selling/writing call option on stock ABC.
Most/all were deep in-the-money calls and most/all were not held for 30 days.
Also some were technically wash sales:
E.g. July 1, buy/write Stock ABC
July 20, stock ABC called (sold) WASH
July 29, buy/write stock ABC again
August 20, stock ABC called (sold)
Also sometimes the option expired unexercised and I sold later on.

I made sure that all my positions were closed before 12/31/2008 (and
all were opened in 2008).

It seems clear that I can easily compute my EXACT tax liability(short-
term gain) by just reducing my cost basis of the stock by the option
premium received for each 1099 stock sale listed. This would be the
"easy-way" to report them on my tax form. E.g. for each sale, list on
Sched D:
Cost basis: stock buy price - option premium

I do understand (alla Pub 550) that this not the proper way to report
all the transactions because of the WASH sales and also because some
of the options may be STRADDLES, but if they are reported the correct-
way the tax liability will be exactly the same as the easy-way (all
positions were opened and closed in a single tax-year).
It seems pointless to spend the extra time to do it the correct way.
Even if there's an audit no extra taxes would be due anyway. Also, I
would also guess that, because the option transactions are not
reported on the 1099, doing it the easy-way would actually reduce the
possiblity of an audit because there would be a clean Schedule D with
the total sales proceeds matching the 1099 reporting number.

Can anyone think of practical reason not to use the easy-way?

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >