Tax Guru-Ker$tetter Letter

Tuesday, March 22, 2005

Subject: stock options
Dear TaxGuru,
My broker did Not include my Stock Options transactions in my 1099-B, and i can't find in the instructions for Schedule D, or anywhere on any IRS publication how to deal with stock options. Are these transactions invisible ? Do stock options have to be reported ? if so, how ?
Thank You Much.

Stock option transactions do have to be reported on Schedule D in the year in which the deal is closed.

Because puts and calls often cross over into different tax years, and are frequently done in different directions, stockbrokers don't need to send this data to IRS because it isn't as easily matched with Schedule D as regular stock sales. This in no way lessens your obligation to report each closed deal on your tax returns.

The timing of when to report these transactions can be a little tricky. My advice is to engage the services of a tax pro who understands how these work to make sure it's done properly. This is not something you want to try on your own. Even many tax pros screw these up all of the time, so make sure whoever you hire has experience entering puts and calls on Schedule D.

Good luck.

Kerry Kerstetter

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 3/22/2005 04:03:00 PM Send this post: