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

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