Reporting of exercised short calls which were previously a wash sale

Home Fairmark Forum Taxation of Investments Reporting of exercised short calls which were previously a wash sale

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  • #77496
    javb
    Participant

    Trying to figure out how to report on form 8949 an exercised short call which were previously (in a different tax year) reported as a wash sale.

    Originally I “rolled” the call and reported it as a wash sale “W” and made a column f adjustment.

    Now this year the shares where called away.  The 1099-B reported the proceeds from the exercise plus the premium from the option.  Of course it doesn’t know about the wash sale.  So now it isn’t clear how to report the loss from the wash sale.

    It doesn’t seem like I should correct the proceeds reported from the broker. My choices are to adjust the cost column or use the adjustment column with a code … “E” seems appropriate.

    In case it matters, in this case the exercise is reported as “undetermined, basis not reported to IRS” … and the cost column is blank so any adjustment would just look like a reported original basis.  (The shares were transferred into the account without a basis.)

    Is either approach right/OK?  If using a the adjustment column is there a better code than “E”?  There doesn’t seem to me much IRS guidance in this case.

    #77532
    amhanra
    Participant

    This is not a response to your question but a question since you seem to be well versed with was sales.

    I was forced by broker (reg SHO 204 buy-in) to square off (buy-in) on short sales transactions (several on one day) on a stock.  The buy-in was done by me (broker threatened to square off in 8 hours time) in 4 separate transactions.

    Now the broker is reporting wash sale on 1099.  To me, since this was forced on me, wash sale cannot apply.  Any feedback greatly appreciated.

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