Do you want to close a position before the end of the year to harvest a profit or loss? If you wish to have a position report as a profit or loss, please be aware there are deadlines to close a position to count towards the 2022 tax year.
2022 tax reporting for long stock/ETFs shares, long or short equity options, and broad-based index options (i.e., SPX, NDX, VIX, etc.) are reported based on the trade date. However, short stock/ETF share positions are reported based on their settlement date. For specific dates, please refer to the position type below.
Position Types
- Long Stock/ETF Shares, Long or Short Equity Options, and Broad-Based Index Options
- Short Stock/ETF Shares
- Outright Smalls, Outright Futures, and Options on Futures
- Cryptocurrencies
Last Day to Close Positions for 2022 Tax Reporting
Long Stock/ETF Shares, Long or Short Equity Options, and Broad-Based Index Options
Trade Date: Friday, December 30, 2022
Profits or losses for long stock/ETF shares, long or short equity/ETF options, and Broad-Based Index Options* (i.e., SPX, NDX, VIX, etc.) report based on their trade date. As a result, any long stock/ETF share position, individual option, or option spread position must be closed by Friday, December 30, 2022, if you wish to report the gain or loss for the 2022 Tax Year.
Long and short options that expire out-of-the-money and worthless on Friday, December 30, 2022, will act as the "closing transaction." As a result, the loss or gain from the option will report in the 2023 tax year.
Unfortunately, losses on long options that expire in 2023 that do not have a bid price ($0.00) cannot be harvested in 2022 unless they are closed. You must carry any long options with a $0.00 bid that cannot be closed to the 2023 calendar year. Only realized losses can get reported, which requires an option to be closed or expire worthless.
Short Stock/ETF (T+2)
Trade Date: Wednesday, December 28, 2022
Short stock or ETF share positions are reported based on their settlement date (T+2) rather than their trade date. Due to position settlement, to harvest a gain or loss for the 2022 Tax Year, you must close the position by Wednesday, December 28, 2022, to report the profit or loss. Due to position settlement, any short stock or ETF share position closed after December 28, 2022, will report in the 2023 tax year because the short position would settle in the 2023 calendar year, despite closing it in the 2022 calendar year.
Accounts holding over-the-counter (OTC) or delisted securities are subject to the same trade date deadlines listed above, depending on your position type. You can determine whether your account has delisted securities by referring to your most recent monthly account statement. Additionally, if you see a delisted position quote on the platform but receive an "instrument_validation_failed" error when routing a closing order, that also indicates that your account holds a delisted security.
To close a delisted security position to realize a gain or loss for the 2022 tax year, please reach out to our trade desk (tradedesk@tastytrade.com) before the deadlines listed above based on your position type.
Outright Smalls, Outright Futures, and Options on Futures
Trade Date: Friday, December 30, 2022
Futures are unique because they are marked-to-market at the end of each trading day. The IRS calls these products Section 1256 contracts. As a result, if you do not want to hold a futures position into 2023, the last day to close a futures position is Friday, December 30, 2022. However, if you hold a futures position into the 2023 calendar year, your futures positions will be mark-to-market. That means a position will report as a profit or loss based on the closing mark, or mark-to-market, despite NOT being closed. To learn more about mark-to-market, please click here.
*Also, a reminder about Broad-Based Index Options
If you trade any cash-settled index options or spreads (SPX, NDX, RUT, VIX, etc.) and wish to realize a profit or loss, the last day to close is Friday, December 30, 2022. To view a list of cash-settled index options, please click here.
Furthermore, broad-based index options (cash-settled index options) are Section 1256 contracts. That means any open broad-based index option position(s) held from 2022 to 2023 will mark as a profit or loss, or mark-to-market, based on the closing mark on December 30, 2022.
Cryptocurrencies
Trade Date: Before 6:00 PM Central on Friday, December 30, 2022
Cryptocurrencies are unique since they continuously trade and do not have sessions breaks like equities or futures. Consequently, to harvest a gain or loss on a crypto position, you must close it before 6:00 PM Central (UTC−06:00) on Friday, December 30, 2022. In other words, the latest you can close a cryptocurrency position to have it report for the 2022 tax year would be at 5:59:59 PM Central (Chicago time).