Schedule D Tax Reporting for Options Trades

R

rd100

Hi,

I know trading options strategies like iron condors, calendars and butterflies on broad based indexes like SPX, RUT etc., you don't need to worry about Schedule D reporting as they qualify for 60/40 tax treatment.

But if you were using same options strategies on their ETF counterparts like SPY, IWM etc., you need to compile your trades on Schedule D for taxes and it can be really time consuming for these multi-legged options trades.

I was wondering if folks around here use any of the software solutions that help in compiling Sch D for such trades.

Thanks
rd100
 
Are you sure about the 60/40 tax treatment on equity based options?

I know futures options qualify for 60/40 but am under the impression all equity based options are are required to be itemized on your schedule D.
 
Yes, I've never heard of 60/40 applying to different "option strategies". That doesn't make sense... no way the IRS can possibly figure out whether you put on an iron condor or just speculated on naked options.

60/40 applies strictly to section 1256 contracts, meaning US-based futures and options on futures. So, if you were trading ES versus SPY, you'd be paying 60/40.
 
Yes, if you trade options on SPX, RUT, NDX -- these are broad based indexes and options trades qualify as 60/40 -- So tax time, it is real easy, enter your profit/loss as one number on Form 6781 rather than listing each trade on Schedule D. ETF options don't qualify for 60/40.
 
Taxation is not based on strategies, it's the underlying instrument. SPX, RUT options qualify for 60/40 since these indexes are broad based indexes.
 
Quote from rd100:

Taxation is not based on strategies, it's the underlying instrument. SPX, RUT options qualify for 60/40 since these indexes are broad based indexes.
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You are exactly right, appreciate the information.
 
Any software recommendations for logging options' trades (that are not 60/40 like the SPY or IWM options) for Schedule D? If they work with IB or thinkorswim, that would be better since I have my accounts at IB and ToS.

Thanks
rd100
 
Quote from rd100:

Any software recommendations for logging options' trades (that are not 60/40 like the SPY or IWM options) for Schedule D? If they work with IB or thinkorswim, that would be better since I have my accounts at IB and ToS.

Thanks
rd100
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IB provides all the information needed for a schedule D.

If you are unfamiliar with that, call and speak with them or take a look at what's available under the annual reports. It's there.

Mark
 
Quote from rd100:

Any software recommendations for logging options' trades (that are not 60/40 like the SPY or IWM options) for Schedule D? If they work with IB or thinkorswim, that would be better since I have my accounts at IB and ToS.
More...
I use Tradelog to prepare my Sched D because I make a LOT of trades (mostly equity). I scale positions up and down which inadvertently creates a lot of meaningless wash sales which are a royal headache to calculate properly. There is an annual fee and the amount depends on the number of trades that you do per year. It interfaces directly with IB.

Another Sched D program often mentioned here is Gainskeeper (I don't know a thing about it). I believe some broekrs offer(ed) it to its customers but I have no clue who does it now. Think Schwab might have. There are a number of low cost/free programs out there (do a web search) but my two cents is that I'm skeptical of freeware and fly by night web sites.
 
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