How Do I Report Short Puts ?

Selling uncovered short puts is a common strategy, either for income or to purchase stock at a lower cost basis. But reporting short puts depends on whether they are assigned or expire worthless.

When short puts expire worthless, report the trade with a cost basis of zero and proceeds equal to the premium received.

For example...
(1) sell 8 puts, premium of $400
(2) cost basis is zero
(3) proceeds of $400

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When short puts are assigned against you, decrease the cost basis of the stock by the premium received, and do not report the puts separately.

For example...
(1) sell 8 puts, premium of $400
(2) assigned 800 shares, cost basis of $62,400
(3) adjusted cost basis of $62,400 - $400 = $62,000

Use Form 8949 to report trades involving short puts.

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