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So I already know that I need to use Schedule D. I also found this very helpful information http://www.smartmoney.com/personal-finance/taxes/taxes-on-option...

But TurboTax premium is confusing the hell out of me. After I select "options" it's asking me to choose if it is "expired" or "sold". To me this doesn't make any sense. If I sell/(write) a contract option, and it expires in 2010 then I won't need to report it, if it's expired then it's fine, and it makes sense to use the EXPIRED option. So to me it only makes sense to chose EXPIRED.

Also how do I report an option that I had to buy back in order to close a put/call, is that considered expired as well? Do I have to report just the closing transaction on Schedule D or also the opening one?

I hope all this makes sense.

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Are these index or currency options? They are treated like section 1256 contracts. For equity options, disregard.

I have a thread with very similar questions recently. You can easily find it. I am glad I didn't shell out the extra for premier.

Pub 550 has a few pages discussing options with some examples and a summary chart. I am not sure how to do it with TurboTax, but it seems like that program is making it more difficult that it is.

Do you report every time you buy a stock on your taxes? Why would you do the same with options?

You say "write a call" so I assume you are selling calls against stocks you own. Regardless, if in 2009 any options expire then you put expired. If you buy back the option you wrote, then you would select the sold option. Hope that helps. (General statements, different rules for different situations and index options).

If your puts / calls (either those you bought, or those you sold / wrote) are still live, then there won't be need to report on 2009 taxes.

nycll said: I have a thread with very similar questions recently. You can easily find it. I am glad I didn't shell out the extra for premier.

I looked at your thread. So I was able to understand one part of the question. But I still don't know how to tread a an option that was sold/written and then bought back to close the position. is this reported as two different transactions on schedule D?

UTan87 said: Do you report every time you buy a stock on your taxes? Why would you do the same with options?

You say "write a call" so I assume you are selling calls against stocks you own. Regardless, if in 2009 any options expire then you put expired. If you buy back the option you wrote, then you would select the sold option. Hope that helps. (General statements, different rules for different situations and index options).


I understand the ones that expire. But if I buy it back why do I report it as SOLD? Maybe it's just TT is making it more confusing. These are just stock options. In what situation would I need to use the SOLD? According to the a few people to report expired contracts you would chose SOLD and then leave the cost of other basis at 0 and that would write expired on the schedule D.

When you sell and buy back an option, you put the date and proceeds on the sales columns and the purchase amount and date on your cost columns. The difference of the dollar amounts is the ST gain or loss. TT's interface supposedly makes this easier for you. You can try enter 1 trade and see if all the numbers land on the schedual D correctly.

great! thanks guys now I understand. Now according to Schedule D instructions I need to write "expired" on column (e). but TT won't let me do it. I can just put $0.00 there. how do I do that?

Expired goes to the date col, not amt col. In the date col you can put the expiration date also.

nvm. I'll make my own post.

nycll, I understand the case where I buy it back to close the position you explained very clearly, but...

well, I am still not clear as far as the case when the option written just expires. I am quoting the schedule D instructions

If an option that you wrote expired, enter the expiration date in column (b) and enter “Expired” in column (e).

but this is not under the PUTS AND CALLS section, so I am not sure if it refers to the same thing. The problem I have is that I imported all my transactions from a .TXF file and the expiration date is in column (c) for options that I wrote, so I am not sure if this is correct or not. Also, will the IRS accept $0.00 instead of "Expired"? Because TT won't let me write EXPIRED.

thanks guys

I just looked at the sch D instruction, and you are right about what it says. Because TT can import from fidelity, I can see it puts zero (instead of expired) after importing. I am sure zero is fine.



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