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Bill
Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3153
Experience:  EA, CEBS - 35 years experience providing financial advice
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Stock options are non reportable income

Resolved Question:

I was wondering why Index and Stock options (calls and puts) are listed as non reportable income on a 1099 statment. Can you point me to documentation explaining this? These are not options granted by a company but options traded with an online brokerage company like Scottrade or OptionsXpress. Maybe it is because the majority of people lose mone when trading options? This is a tough one!! Thanks.
Submitted: 9 years ago.
Category: Tax
Expert:  Bill replied 9 years ago.

The nonreporting issue is probably related to the difficulty of recordkeeping for opening/closing transactions for writers of contracts and the expiration of the contracts.

Pages 56 and 57 explain the details of tax reporting for investors - http://www.irs.gov/pub/irs-pdf/p550.pdf

 

Customer: replied 9 years ago.
Reply to Bill's Post: I did not see anything that mentions why it is NON REPORTABLE. I know how to declare it in Turbo Tax. I just cannot find any documentation as to why the 1099's list them as NON REPORTABLE. I appreciate your help but I alrady have documentation about straddles and such.
Expert:  Bill replied 9 years ago.

I can't find any regulation that states the reason that these transactions are nonreportable. The IRS 1099-B instructions do not address these types of transactions other than the broker may (but is not required to) report the exercise of call options.

Page B-2 - http://www.irs.gov/pub/irs-pdf/i1099b_07.pdf

 

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