Question

Reporting covered call option transactions

Forum|Forum|6 years ago
February 2, 2020
3 replies
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How are sales proceeds and cost basis entered since both are negative dollar amounts (TT doesn't allow for a negative cost basis to be enterered?

LindaB1993

The sales proceeds is actually the selling price for the Call option (should be a positive number).

The cost basis is the original purchase price upon acquisition.

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B

beameryh

I sold the call it expired

K

KristinaK

Employee

To report an expired covered call transaction, enter the money received under Sales. Your Cost will be zero. And it is most likely a short-term transaction (less than one year between the sale and the expiration dates).

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W

wbc

My broker (eTrade) sent me a 1099 with net trade amount as proceeds for options trades. This is how they said the IRS wanted it reported. it was a change this year. TurboTax will not allow entry of a negative proceeds. Will TurboTax be fixing or do I enter buys and sells, but if I do that, is there an audit risk since it does not match the 1099.

DMarkM1

As long as the net from your buy and sell entry equals the net on the 1099 all will be good.

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J

jkirktt57

I buy and sell stock options. My broker is Fidelity and I use the TurboTax import feature as I have over 2000 transactions for 2021. After importing the data from Fidelity and completing my Federal Taxes my Federal return has no errors. However, after completing the Massachusetts return and running the error check I have 217 errors on the Massachusetts Cap Gain/Loss Worksheet with the same error, Gross Sales can not be less than 0. I hadn't touched these transaction as I simply used the Import feature to download into my Turbotax return.

After investigating these transactions I found these are all covered calls where I sold an option as part of the covered call but the stock price rose and I had to buy back the option I sold at a loss. For example I sold a Fedex option at 250 but had to buy it back at 500 which resulted in a 250 loss. The Federal Return on the 1099-B Worksheet records the Sale Proceeds as -250, cost 0 and the Gain/Loss of -250, no errors and I have 217 of these transactions. On the Massachusetts Cap Gain/Loss worksheet the data gets imported as a Gross Sales Price of -250, Cost Basis 0 and a Gain/Loss of -250 but I get the error the Gross Sales Price can not be less than 0.

I could manually update the 217 transactions by changing the Gross Sales Price to 250 and the Cost to 500 so that it ties out to the -250 but that will be a lot of work on my part. Is this a known bug? Did I do something wrong during the Import? If I have to edit the Massachusetts Cap Gain/Loss Worksheet the Gain/Loss column will tie back to the Federal Worksheet but the Sales Price and Cost basis will not. How do I fix this issue?

John Kirk

[phone number removed]