You sold for $40 end of story...your net sale will be what you keep.
Taxable amount of a ShortSale
- Thread starter Quanto
- Start date
You sold for $40 end of story...your net sale will be what you keep.
Yep, very logical; me too sees it this way.
But then I think one has to be careful:
one better should not verbatim use the amount given on the broker statements for the tax declaration,
b/c it very much seems that the broker calculates differently than what would be the correct value for tax declaration...
See also:
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LOL good points;
except tax free muni bonds disagree, + tax free Roth disagrees
And depends on location + market.
Usually a city will add on more taxes, on gross or net;
maybe not taxes on insurance premium or option premium
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 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?
B/c after 2024-02-22 it did not happen again, my program logs show (archived data that was got via API and saved)
BUT: have they now maybe introduced a new bug?
b/c it now says unsettledCash = 0.0 after such short sales.
That too looks fishy, IMO...
Or something fundamentally has changed (maybe the effect of the new T+1 settlement rule for stock sales, hmm. but my above said example was just a ShortPut w/o any stock involvement)...
Update: after the above date I made no ShortPut (ie. CashSecuredPut) trades yet,
did instead only CoveredCall (= ie. LongStock + ShortCall) trades.
The funny thing is: for these CoveredCalls the unsettledCash is 0.0.
So, it means the broker differentiates between ShortPut and ShortCall trades.
UnsettledCash happens only with ShortPut trades, not with ShortCall trades.
That's all somehow funny, IMO
I now will research the previous cases in my account...
I just looked up: yes, with ShortCall it does not happen, even before the above said date...
What's so special with ShortPut over ShortCall regarding unsettledCash?
IMO an illogical different handling of the two cases.
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Dude...
When did you open this transaction? And when did you close it? (i.e., your short put expired, was assigned, or you bought to close)
Did you close the position in 2023 or 2024?
Your broker's logs are meaningless for tax purposes. What matters is the data on the 1099 form, because that is what is sent to the IRS.
Yes, in rare cases, the data on Form 1099 may be inaccurate. And your transaction history and trade confirmations are important in those rare cases. The transaction history can help identify errors on the 1099.
But if the short put you are talking about was closed in 2024, you won't see the 1099 form until next year. You shouldn't even be thinking about that right now. Whatever you think you saw in your broker's "logs" is irrelevant for tax purposes. You won't know if they are getting it right until you get the 1099, and for transactions that close in 2024, you won't see that 1099 until early next year.
Stop worrying about this stuff LOL In most cases, the data reported on the 1099 is accurate.
I am a licensed tax advisor.
When did you open this transaction? And when did you close it? (i.e., your short put expired, was assigned, or you bought to close)
Did you close the position in 2023 or 2024?
Your broker's logs are meaningless for tax purposes. What matters is the data on the 1099 form, because that is what is sent to the IRS.
Yes, in rare cases, the data on Form 1099 may be inaccurate. And your transaction history and trade confirmations are important in those rare cases. The transaction history can help identify errors on the 1099.
But if the short put you are talking about was closed in 2024, you won't see the 1099 form until next year. You shouldn't even be thinking about that right now. Whatever you think you saw in your broker's "logs" is irrelevant for tax purposes. You won't know if they are getting it right until you get the 1099, and for transactions that close in 2024, you won't see that 1099 until early next year.
Stop worrying about this stuff LOL In most cases, the data reported on the 1099 is accurate.
I am a licensed tax advisor.
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It happens immediately at the opening trade when it gets filled!...
Ie. with an opening ShortPut fill, the unsettledCash immediately rises to the value "(K + Premium) * 100"
You tell me the logic in this, and whether the above formula used by TDA is correct...
Actually they subtract the premium + fees from that value, ie. $0.65 + $0.01 per contract, for example, ie.:
K=3.50, Premium=0.40 --> gives unsettledCash = (3.50 + 0.40) * 100 - 0.65 - 0.01 = $389.34 .
Beware: as stated, this is a CashSecuredPut (CSP), ie. a ShortPut with an implicit CashCollateral = K * 100 .
Reminder: we have 2 issues here: the unsettledCash case and the tax case, yes.
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It happens immediately at the opening trade when it gets filled!...
Ie. with an opening ShortPut fill, the unsettledCash immediately rises to the value "(K + Premium) * 100"
You tell me the logic in this, and whether the above formula used by TDA is correct...
Actually they subtract the premium + fees from that value, ie. $0.65 + $0.01 per contract, for example, ie.:
K=3.50, Premium=0.40 --> gives unsettledCash = (3.50 + 0.40) * 100 - 0.65 - 0.01 = $389.34
Beware: as stated, this is a CashSecuredPut (CSP), ie. a ShortPut with an implicit CashCollateral = K * 100
Reminder: we have 2 issues here: the unsettledCash case and the tax case, yes.
Unsettled cash, in this context, sounds like the cash that is "tied up" in your account, because you have to have that cash available to buy the stock if the short put is assigned. You referred to this as collateral.
Unsettled cash is not used to determine the tax consequences of your trade.
But it's both
Collateral to automatically fulfil the duty when get assigned.It's the value K * 100.
But the unsettledCash uses an even mysterious logic when it uses this formula: (K + Premium) * 100.
Either it's completely wrong, or they just mixed up '-' and '+', or or or...
IMO, the unsettledCash should be either $40 or $350 or $310, but no way $390
That's the question. If the broker makes such errors like in the unsettledCash case, then one cannot be sure how accurate the tax documents are... I haven't studied the tax dox of the past yet, as it's much & tedious work...
I'm not convinced they made an error.
In this context, unsettled cash may not mean cash that you received from selling something. It may simply refer to cash that is on hold, and unavailable for withdrawal or trading, because it has to be there in case your short put is assigned. It's not cash flowing into your account. It's cash that was already there, but not it is unsettled until the short put is closed.