How do you report options that were assigned to the IRS?
dman81
report to the IRS when dealing with options and dividends.
I bought ABC stock for $9.36 and then I wrote calls and received the
premiums. I also received the dividend but then I was assigned and had
to pay the dividend back.
How do I report this transaction?
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Arthur Kamlet
dman81 <daniel...@gmail.com> wrote:
>Gathering my information to report to IRS I am stuck with how you
>report to the IRS when dealing with options and dividends.
>
>I bought ABC stock for $9.36 and then I wrote calls and received the
>premiums. I also received the dividend but then I was assigned and had
>to pay the dividend back.
>
>How do I report this transaction?
There are several reporting issues: i) reporting the sale of ABC,
ii) reporting the premium received for the ABC calls, and iii)
reporting the dividend and repayment of dividend.
i and ii) The sale of the stock is rported like sale of any other
stock, except you reduce the cost basis by the call premium received.
Combine the stock sale and call premium all on one single tranaction,
using the stock acquisition and sales dates only, ignoring call dates.
iii) Apparently the broker paid you a dividend you were not
entitled to, and then you paid it back. Wait and see if the
broker's 1099DIV cancels out that dividend. If not, I would
report the dividend as shown on the 1099DIV, on Schedule B (even if
you need not otherwise file schedule B) and then enter something
like "Repayment of dividend improperly reported ... ($XX)" and
that should cancel out the dividend received.
================ =================
OT, there is a procedure covering "Dividends paid in lieu" which
typically occurs when you have shorted a stock and a dividend is due
and you are obligated to pay it.
But your stock was held long, and your repayment does not appear
to be a Dividend in lieu, but I'm willing to be convinced otherwise.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
dman81
> In article <2e5f063b-59e1-4b3e-ac13-68f357933...@k19g2000yqc.googlegroups.com>,
Fantastic answer! I believe the broker will cancel out the dividend
and I will be left with just reporting the calls and shares. Is there
a site that you personally know of where I can do more reading on this
or maybe a book? Thank you!
Arthur Kamlet
I would generally look at the IRS Instructions to Form 1040
Schedule B and Scedule D, and also IRS Publication 550, but
your particular situation isn't there.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
--
dman81
Following-up on my previous question, my broker did not cancel out the
dividend thus now I must correct this on my taxes. Art provided me
with this answer:
"Apparently the broker paid you a dividend you were not
entitled to, and then you paid it back. Wait and see if the
broker's 1099DIV cancels out that dividend. If not, I would
report the dividend as shown on the 1099DIV, on Schedule B (even if
you need not otherwise file schedule B) and then enter something
like "Repayment of dividend improperly reported ... ($XX)" and
that should cancel out the dividend received. "
My broker provided me with a 1099DIV, reporting Qualified Dividends
$1,835.82 and Non-dividend Distributions $338.52 totaling $2174.34.
This is the amount that should had been canceled out. My question is
what part of schedule B do I enter this correction? I found on
schedule B a section titled " Adjustments to Dividends or ESOP
Distribution" and three boxes you can click. Box H is titled "Other
adjustments" and allows a description. Is this the area I enter the
adjustments? Is the description to note "Repayment of dividend
improperly reported"?
I also have two dividend charges, totaling $163 (I went short the
stock) where can I enter this information?
Thank you in advance.
Daniel
Arthur Kamlet
dman81 <daniel...@gmail.com> wrote:
>
>Following-up on my previous question, my broker did not cancel out the
>dividend thus now I must correct this on my taxes. Art provided me
>with this answer:
>
>
> "Apparently the broker paid you a dividend you were not
>entitled to, and then you paid it back. Wait and see if the
>broker's 1099DIV cancels out that dividend. If not, I would
>report the dividend as shown on the 1099DIV, on Schedule B (even if
>you need not otherwise file schedule B) and then enter something
>like "Repayment of dividend improperly reported ... ($XX)" and
>that should cancel out the dividend received. "
>
>
>My broker provided me with a 1099DIV, reporting Qualified Dividends
Ignore qualifuying dividends for this exercise and concentrate om
ordinary dividends. And now it comes out you were short and
ave to make "in lieu of" payments.
The treatment of in lieu of payments is different.
And it depends whether you met the 45 day rule or not. My
suggestiion is to download IRS Pub 550 and search for
"in lieu of" and that will give you the answer!
Don't try to correct schedule B.
>$1,835.82 and Non-dividend Distributions $338.52 totaling $2174.34.
>This is the amount that should had been canceled out. My question is
>what part of schedule B do I enter this correction? I found on
>schedule B a section titled " Adjustments to Dividends or ESOP
>Distribution" and three boxes you can click. Box H is titled "Other
>adjustments" and allows a description. Is this the area I enter the
>adjustments? Is the description to note "Repayment of dividend
>improperly reported"?
>
>I also have two dividend charges, totaling $163 (I went short the
>stock) where can I enter this information?
>
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
--