I received a 1099-B from my broker that accounts for the stocks I purchased/sold, but the form does not account for equity options. From what I've read on the internet, this is apparently quite common: equity option purchases/sales are not reported to the IRS on 1099-B. My broker, Penson, did send a separate page that lists 'Option Purchases' and 'Option Sales'. I most certainly have capital losses but I can't figure out how to declare them.

I am using TaxCut Premium 2008. The software says I enter a purchase date(s) and a single sale date. The problem is I can only enter a single sale date and I can't figure out how I'm supposed to split the transactions. TaxCut doesn't have any other scenarios specific to this situation.

I purchased an in-the-money options security on several different dates. And I sold different amounts of that same security on several different dates later. It l looks like this...

'Option Purchases'
Date-of-Sale, Quantity:
07/07/08, 75
07/07/08, 87
07/07/08, 128
07/10/08, 5
07/10/08, 240
07/17/08, 131

'Option Sales'
Date-of-Sale, Quantity:
07/08/08, 36
07/10/08, 8
07/10/08, 246
07/11/08, 113
07/18/08, 1


Do I start by entering a basis that only includes the purchase amounts of date 070708? How would I calculate the sale amount and date? I purchased 290 contracts on that one day, but I only sold 36 on 070808 (the next day).
Or would I go divide the 0707 amounts by the quantities to get the individual contract amount, multiply that by 36, and enter that amount in as the basis, with a sale date of 070808 and 36 and the amount listed; and then for the next entry I would enter a purchase date of 070708 again but this time adjusted 290-36?

I'm so lost! Surprising TT doesn't cover this.

Thanks guys

Please note that above I listed Date-Of-Sale when I should have listed Date-of-Purchase below 'Option Purchases'.

Quote:

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Originally Posted by QuestionForYou

Or would I go divide the 0707 amounts by the quantities to get the individual contract amount, multiply that by 36, and enter that amount in as the basis, with a sale date of 070808 and 36 and the amount listed; and then for the next entry I would enter a purchase date of 070708 again but this time adjusted 290-36?

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That is what I did. I had to enter the sales separately. Complicating things was the wash sale rule when I lost money. So even though I had the first entry as buying and selling 36, which I lost money on, I had to claim it as a wash since I re-bought the same securities. The whole thing was a wash since I re-bought >= 36 after I sold.

I cannot even tell you how complicated this was. I had zero help from TurboTax: it told me when there are multiple sale dates to enter separately. However you have to do the math and split up the purchases. I used Windows Calculator (calc.exe) and Windows Notepad (notepad.exe) and it took me about two hours to work out the calculations.

Code:

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bought:
070708        75        9,042                120.56 per contract
(        36        4340.16        )
(75-36=        39        4701.84 )
sold:
070808        36        3037.41               

so the first entry is this:
basis:        070708        36        4340.16
sold:        070808        36        3037.41

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I lost 1,303 on this entry but I cannot claim it as a loss. I had to claim it as a wash because I re-bought the contracts. What that means is that after the sale (070808) if I rebuy, which I did, I must add that loss to my next purchase after the sale. Notice I have more 070708 contracts that I have not yet entered; well I cannot add the loss from the 070808 sale to the other 070708 purchases.

It was really confusing. I wish there was a program where I could, like, enter all the data from my broker's sheet and then it does all that stuff for me. I thought that was TT but boy was I wrong. I want to save myself this hassle next year, and if anyone has been through this or knows what I'm talking about please advise.

Thanks

QFY:

If I were you, I would get a tax professional who has experience reporting such sales and let HIM/HER do the return.

The complexity of this issue is such that you REALLY cannot discuss adequately on this or any other tax forum.

I meant H&R Block TaxCut Premium 2008, that is what I have. Not TurboTax. Unfortunately I am not allowed to edit my posts.

I did file taxes myself. TaxCut advises if you have multiple sale dates for the same security to manually split up the purchases. It was totally ridiculous! I agree with your advice. Thanks for your reply.