Taxable amount of a ShortSale
- Thread starter Quanto
- Start date
Its a satisfying feeling to open a thread and see no posts whatsoever.
Yes, makes sense.
But I'm afraid the broker's statement will tell a much different story to the tax office,
b/c it seems somehow the broker thinks the sale was even $390, ie. the sum of both values...
I made an options short sale of $350 that will be finalized in the future (ie. on the options expiry date),
and received an immediate premium of $40. Does this make a net sale of $350, or $310, or $390 ?
Can a taxman answer this please?
I am no taxman and no tax expert.
BUT!!!
One thing I know very well;
The more tax you pay, the happier you are !!!!!
If you are paying $1 tax, that means you only earn $10k/yr.
If you are paying $1m tax, that means you are earning tons and tons of money.
REJOICE !!!!!
Trust me I understand...im going back with my broker now over something I know is incorrect yet they keep failing to correct it. I have a feeling most statements and 1099s are far from accurate
I think we have to trace this scenario of stock option shortselling further to verify whetherI made an options short sale of $350 that will be finalized in the future (ie. on the options expiry date),
and received an immediate premium of $40. Does this make a net sale of $350, or $310, or $390 ?
Can a taxman answer this please?
the broker's statement correctly handles (for tax issues etc.) all the possible cases related to such a sale.
Imagine this Put shortselling: we have to differentiate for all these 4 cases:
1) Option expires worthless (OTM for the counterparty); no need for us to buy the stock.
2) Auto-assignment (at expiration) if ITM for counterparty, initiated by broker or the OCC clearing; afterwards we own the stock.
3) Early-assignment (initiated by counterparty), afterwards we own the stock.
4) Early-closing by buying-back the option (initiated by us); no need for us to buy the stock.
See also
https://www.optionseducation.org/referencelibrary/faq/options-exercise
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I made an options short sale of $350 that will be finalized in the future (ie. on the options expiry date),
and received an immediate premium of $40. Does this make a net sale of $350, or $310, or $390 ?
Can a taxman answer this please?
Why didn't you receive the entire $350? Isn't all premium immediate and all that matters for tax is how much you keep
I got all the premium: it was the said $0.40 --> $40 per contract.
The $350 is the CashAcct collateral for the said strike 3.50.
The broker seems to say I sold for $390 (the 350 + the 40). It's IMO really funny how the broker views this.
The broker clearly says "UnsettledCash is $390" (IMO that statement is questionable as well).
I try to figure out whether he also says I have to declare $390 for tax payment...
How would you interpret such a broker?
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