Yahoo Answers is shutting down on May 4th, 2021 (Eastern Time) and beginning April 20th, 2021 (Eastern Time) the Yahoo Answers website will be in read-only mode. There will be no changes to other Yahoo properties or services, or your Yahoo account. You can find more information about the Yahoo Answers shutdown and how to download your data on this help page.
Trending News
how do I report a wash sale between stock and options?
I sold a stock for loss and bought call options within 30 days following and am not sure how to adjust my cost basis to defer the loss. It actually gets more confusing than that because I bought the stock twice. For example (these are not exact figures but close enough to answer the question):
On 5-1-11 I bought 100 shares of company X for $20/share or $2000 total.
Company X declined in value and I bought 100 more shares on 9-1-11 for $10/share or $1000 total.
I sold 100 shares of company X on 9-20-11 for $12 a share or $1200 total.
Then on 10-1-11 I bought 5 call options that expire in Jun 12 of company X. These options have appreciated in value but I'm still holding them in 2012.
Now my broker using a FIFO tax system reported the sale on 9-20-11 as a loss of $800. I would've probably done the same thing and held out for a long term gain on the second 100 shares. But now what do I do with the cost basis of the options? The sale is definitely a wash because I bought call options, but do I just lose that write off or do I roll the loss into my options purchase (add $800 to my cost basis of the options)?
Also the call options are going to have a gain when I sell them and I don't think my broker calculates wash sales so they will report my cost basis incorrectly and I'm concerned about making adjustments to the 1099. Obviously don't want to get audited, even though all my filings are correct. Is adjusting the cost basis that unusual?
Ted I appreciate the response but that is definitely not true. Call options of the same underlying symbol are considered substantially identical stock.
3 Answers
- TedLv 79 years agoFavorite Answer
Stocks are not options so they're not the same security so there is no wash sale.
- 6 years ago
I know this is an old question, but I am going to try to answer because I have been thinking about this.
You would add the $800 to the cost basis of the options.
If you are still interested in this question and discussion, please reply
- 9 years ago
Maybe you should use an inventory accountant instead of a broker for FIFO. None of what you say makes any sense what so ever using FIFO. If you are not a actual trader company, you cannot use wash sale. You didn't have any inventory in an option contract because it is a derivative and not inventory. Gee, maybe you should ask your broker to do LIFO and don't forget to ask about accounts payable and billing.