Position Reporting for End of Year Taxes

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 2021 tax year. 

2021 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


Last Day to Close Positions for 2021 Tax Reporting

Long Stock/ETF Shares, Long or Short Equity Options, and Broad-Based Index Options

Trade Date: Friday, December 31, 2021

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 31, 2021, if you wish to report the gain or loss for the 2021 Tax Year.

Long and short options that expire out-of-the-money and worthless on Friday, December 31, 2021, will act as the "closing transaction." As a result, the loss or gain from the option will report in the 2021 tax year. 

Unfortunately, losses on long options that expire in 2022 that do not have a bid price ($0.00) cannot be harvested in 2021 unless they are closed. You must carry any long options with a $0.00 bid that cannot be closed to the 2022 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 29, 2021

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 2021 Tax Year, you must close the position by Wednesday, December 29, 2021, to report the profit or loss. Due to position settlement, any short stock or ETF share position closed after December 29, 2021, will report in the 2022 tax year because the short position would settle in the 2022 calendar year, despite closing it in the 2021 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 2021 tax year, please reach out to our trade desk (tradedesk@tastyworks.com) before the deadlines listed above based on your position type.


Outright Smalls, Outright Futures, and Options on Futures

Trade Date: Friday, December 31, 2021

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 2022, the last day to close a futures position is Friday, December 31, 2021. However, if you hold a futures position into the 2022 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 31, 2021. 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 2021 to 2022 will mark as a profit or loss, or mark-to-market, based on the closing mark on December 31, 2021.


Cryptocurrencies

Trade Date: Before 6:00 PM Central on Friday, December 31, 2021

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 31, 2021. In other words, the latest you can close a cryptocurrency position to have it report for the 2021 tax year would be at 5:59:59 PM Central (Chicago time).