Copyright OptionsTaxGuy LLC

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About

The OptionsTaxGuy website

 

This site is designed to help you understand the tax implications of trading options.

 

You will learn:

 

  • tips for do-it-yourselfers and/or

  • how to present your tax preparer with the proper information so that your tax return may be prepared as accurately as possible.

 

This site will help save you money!  Many options taxation websites (there are not that many) attempt to sell you entity setup and compliance services that can cost anywhere from $3,000 to $5,000 initially and over $2,000 per year in compliance.  A lot of that you either don’t need or can do yourself!

 

This site will also assist you in:

  • Visually understanding option trades

  • Learning about how option transactions are taxed and reported

  • Determining if you qualify as a trader or an investor

  • Determining if you should trade inside an entity

  • Getting a taxpayer identification number for your trading entity

  • If you qualify as a trader, then whether to make the mark-to-market election

  • Reporting under different entity considerations

You might even learn some more about trading ...

is all about ...

The taxation of option trades ...

Option Trades are Proliferating

In a recent (12/17/2015) video by Options Action, produced by CNBC, Michael Khouw states that Open Interest in options has increased by almost 6% for December expirations, according to the following graphic:

... but how are they taxed?

Mr Khouw goes on to say that a large component of that open interest is in S&P 500 ETF known as SPY:

... the optionstaxguy will show you how ...

Well, there is a lot of information on the Internet about trading options but not a lot about how they are taxed and how to present them on your tax return ... And that is what we’ll try to accomplish here!!

And More Recently ...

According to statistics compiled by The Options Clearing Corporation, the OCC, as of September 15, 2017, the year-to-date totals for option trades are staggering:

Over 3 billion trades need to be reported

What Others Are Saying about The OptionsTaxGuy site

Here's what visitors are saying:

“I've read through your presentations for the optionstaxguy web site.  It is great information.”


“I want to compliment you on the site.  I found it to be very useful and it answered a lot of questions that I had about doing my taxes”


“First, thank you so much for publishing some of your knowledge through your website. The design was friendly and the content was much easier to read through than some other sites.”


“I have to commend and thank you for putting so much free information on your site.  Most of all I want to thank you for explaining everything in layman’s terms so that the average person who is not an accountant can understand [what] all this … means”


“Thanks to your help, I have almost completed my own [Form] 8949. Your website is great and your help is priceless. Thank you very much.”


I hope you find this website informative and useful as well!!
 

So, who is the Options Tax Guy?

When I began trading options, there was not much reliable information or software to calculate gains and losses.

 

Therefore, I became a more in-depth student of options taxation and wrote my own software - or more appropriately, my own process using software - for determining option trading gains and losses for tax reporting.

 

Click here to read about downloadable options tax reporting software.

I trade stock and options seriously and have been for quite some time.


I am a Certified Public Accountant (www.cpaverify.org) and research options trading and taxation extensively.  I am a former options trading instructor for OptionsAnimal, an online options trading education company.


I am also a regular contributor on Seeking Alpha and others are listening.  Here are some of their comments to a tax thread where I contribute frequently and some excerpts from emails I’ve received:


“This thread is really getting good ... thanks a lot for all the contributions!”

“This thread is very informative. I suggest that we create some sort of a Hall of Fame for forum topics and post this thread there for future use of all contributors. A sticky at the very top perhaps... “

“Great to see this tax discussion evolve, especially with a CPA (Greg) being the voice of reason here.”


“the downside of making money is the tax-work that goes into it, ... and obviously you know your stuff real well!”

We are not going to try to sell our tax preparation service to you but it is available if desired.  Click here to find out more about our services.

Education

BBA - Economics/Finance, Baylor University
MBA - Accounting/Finance, Baylor University

 

President - Graduate Business School Student Organization
 

Beta Alpha Psi - National Accounting Honor Society
Omicron Delta Epsilon - National Economics Honor Society
Financial Management Association - National Finance Honor Society
Beta Gamma Sigma - National Business Honor Society


Certified Public Accountant - Texas

Experience

Arthur Andersen (now Accenture)

Arthur Young (now Ernst & Young)

Industry - Financial Planning Manager; CFO/Controller

Public Accounting - President/Shareholder

What Is Covered and Not Covered

Briefly, this is what we will and will not discuss on this website:

  • The tax information provided here is for US residents only.  There may be some applicability to non-US tax agencies but no guarantees can be made.

  • We will discuss options strategies and their tax implications only.  There will be NO discussion regarding commodities, currencies or futures, except as it impacts the trading and taxation of options.

  • The tax and option strategies discussed, and examples used, are in no way a recommendation to trade a particular stock or take a particular tax position.  They are for educational purposes only so that you will be a better informed options investor/trader.  See our disclaimer for further information.  By continuing to read the information on this website it is assumed you have read and agree with the disclaimer.

  • By no means is this an exhaustive treatise on the taxation of options.  Every attempt has been made to provide you an overview of the rules and some examples to clarify.  As you will conclude, no doubt, the taxation of options is very complicated.

  • The tax strategies and discussions on this site are for educational purposes only and cannot be relied upon to prevent and/or avoid penalties assessed by IRS on a tax return position taken as a result of using this website.