Income Taxes and Record Keeping ( tax ) Message Board

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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )

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To: Privately who wrote (5800)	4/3/2024 11:39:15 PM
From: Elroy	Read Replies (1) of 5810

You are making a joke, but I think I'm correct and they're doing the 1099s wrong for EVERY account. Look at it this way. You can fabricate unlimited short term losses. Sell a $100 MLP put on a $10 MLP for $90 premium received. The $10 MLP put gets exercised. You pay $100 for an MLP that is worth $10. TD reports to the partnership that you paid $100 for the units. Sell the MLP for $10. TD says your loss on the section 1256 put is zero (mark to market is $10 MLP price - $100 strike = negative $90 mark to market value, offset by $90 premium received, net zero gain/loss on the put). The partnership knows you just paid $100 for these units which you are now selling for $10. The partnership gives you a $90 capital loss on that sale. You paid $100 to buy the MLP, and you received $90 premium and $10 in the sale of the MLP. That's a wash. But you have a $90 capital loss from the partnership for buying at $100 and selling at $10. You can do this as often as you like to produce unlimited capital losses, according to TD.

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