Are stock option puts and calls taxable?
August 22, 2011
From: Regan
Date: 27 Jan 2009
Subject: Stock options
Hello,
I have purchased traded stock options – puts and calls – through a brokerage company. I usually hold the options from 1 day to weeks. My colleagues say the gains or losses do not have to be reported to the IRS since they are not for stocks. They are just contracts to buy and sell securities, not the securities, themselves.
Is this true?
Thanks,
Regan
Answer
Date: 4 Feb 2009
Hello Regan,
No.
The stock brokerage company isn't currently required to report these transactions to the IRS on a Form 1099-B. They are scheduled to have to do it, eventually.
A complication is a put or call can be "closed out" with the underlying stock.
However, put and call transactions are required to be reported on Schedule D.
A helpful reference for these transactions is Tax Facts On Investments, published by The National Underwriter Company. 800-543-0874, www.NUCOstore.com.
Good luck!
Mike Gray
For answers to new questions, subscribe to our newsletter, Michael Gray, CPA's Tax & Business Insight by filling out the form below.
Home Newsletter Archive Introducing Michael Gray, CPA Articles Tax FAQ Need Help? Other Links
Find us on Facebook
Follow me on Twitter
Connect on LinkedIn
Connect on Google+
Our Blog