Writer of Options - Schedule D Presentation?

[Hamacher]

I have a client that writes call and put options and receives a premium for doing so. The brokerage statement shows the sale date as the date the option was written. There were several options that expired in 2007 but were written in 2006. Should the sale date be 2006 (when it was written and as it is shown on the brokerage statement) or should it be 2007 (when it expired and actually is taken into income)?

Thanks in advance.

[erchess]

Options are reported in the year they

are exercised or expire. Beyond that the details would depend on your software but the first step is almost surely to tell the computer that the trade is a put or call so that it will then ask you the right questions.

[Hamacher]

Thanks for your response

My software doesn't "ask me questions". I just need to know what to use for an acquisition and sale date?

Anyone?

[gkaiseril]

Use the Actual Dates of the Transactions and Report Open Positions

Use the actual date of sale and purchase as reported by the broker so the detail of the transactions matches the breakage statements and do not appear as a different transaction. The holding period will be the absolute value of the days held (just drop the negative sign) and any item held more than 1 year (365) days is a long term item and any item held 365 days or less is a short term item. You will need to report the open short sales at year end so that the total gross sales on Schedule D are equal to or greater than the total of the 1099-B's reported gross sales, which includes the open short sales. If you do not, the IRS will be contacting your client about unreported sales since the Schedule D total gross sales could be less than the total gross sales reported on form 1099-B's. This can be done by a short term sale entry with the sales price and purchase price equal to the total of the open short sales and a description of "open short sales at year end", the purchase date 12/31/2007 and any of the dates from the open short sale. This will bring the Schedule D gross sales total to be equal to or greater than the total of the 1099-B gross proceeds, which if not matched will trigger a check for unreported sales on the Schedule D.

One cold also provide an Excel schedule detailing the open short sales showing the reported sales date from the brokerage stamen, "12/31/2007" as the purchase date, and the sales price from the brokerage statement and t he purchase price the same as the sales price.
.

[Hamacher]

What about 2006 sale dates?

So you dont think that having some 2006 sale dates will trigger a notice? It also looks odd having the purchase dates after the acquisition date.

Steve

[gkaiseril]

2007 Purchase Date

Not with a 2997 purchase date.

Remember your client is selling a barrowed security to be replaced at a later date.