Options Trading Tutorial

On 2007 Taxes Section D, how do I need to list option trades from my trading account?

Can I list them simply as "200 ATI PS", or DO I need to list them as "200 ATI Apr 95 Put"?

Public Comments

1. Either way of describing the options would be okay. Please note that: (1) purchases of puts and calls can generate long-term gain or loss depending upon how long you hold them. (2) Writing puts and calls always generates short-term gain or loss. (3) If you hold the put or call until expiration and it expires worthless, then you write "expired" for proceeds or cost basis, as appropriate. (4) Writing calls or buying puts may need to be accounted for as a sale of the underlying stock, if you owned the stock during part of the time that you held the put or call. This may also be true for buying calls and writing puts, if you have a short position in the underlying stock. (5) Excercising calls is treated as a purchase of the underlying stock, with the option premium added to the strike price to calculate the cost basis. (6) Excercising puts is treated as a sale of the underlying stock, with the put premium subtracted from the strike price of the option to calculate the proceeds from the stock sale. (7) Straddles, hedges and other complicated combinations of puts and calls are accounted for in a special manner on form 6781 not on schedule D. I hope this helps. Richard K This advice is based upon our understanding of the law in effect at the time it was written as applied to facts described.
2. Do whatever is convenient to you. Report each and every sale. Take care of wash sales. Or you can directly download from broker's site on schedule D if you are using a tax software. 2007 tax return can not be efiled. Read http://taxipay.blogspot.com/2008/04/list-of-articles.html