Position Reporting for End of Year Taxes

Are you looking to close a position before the end of the year to harvest a profit or loss? If so, and you wish to have a position report as a profit or loss, then please be aware there are deadlines to close a position to count towards the 2020 tax year. In short, 2020 tax reporting for long positions are based on the trade date. However, short positions are based on their settlement date. For specific dates, please refer to the position type below:


Last day to Close for 2020 Tax Reporting

Long Stock/ETF and Stock/ETF/Index* Options

Trade Date: Thursday, December 31, 2020

Long stock/ETFs and long stock/ETF/index positions for tax reporting base on the trade date.


Short Stock/ETF (T+2)

Trade Date: Tuesday, December 29, 2020

This is due to stock/ETF trade settlement of T+2, or Trade Date PLUS two business days. Any stock or ETF position closed after December 29, 2020, will report in your 2021 tax year.


Short Stock/ETF/Index* Options (T+1)

Trade Date: Wednesday, December 30, 2020

This is due to options trade settlement of T+1, or Trade Date PLUS one business day. Any stock/ETF/index option closed after December 30, 2020, will report in your 2021 tax year.


A word about long or short options spreads

Please note that a long or short vertical, iron condor, calendar, diagonal, butterfly, etc. consists of a long leg and a short leg. As a result, if you wish to close an option spread to count towards the 2020 tax year, then the spread must be closed by Wednesday, December 30, 2020, due to the T+1 settlement time of the short leg. As a result, any options spread closed after the deadline will result in the long leg reporting in the 2020 tax year and the short leg reporting in the 2021 tax year.


Outright Smalls, Outright Futures, and Options on Futures

Trade Date: Thursday, December 31, 2020

Futures are unique in the sense that they are marked-to-market each trading day. The IRS calls these products Section 1256 products. As a result, if you no longer wish to hold a futures position into 2021, then the last day to close out of the position is Thursday, December 31, 2020. However, if you wish to hold a futures position into 2021, then the position will mark-to-market. That means a position will report as a profit or loss based on the closing mark, despite NOT being closed. To learn more about this, please click here


*Also, a reminder about Index Options spreads

If you trade any cash-settled index option spread (SPX, NDX, RUT, VIX, etc.) and wish to realize a profit or loss on any open position, then the last day to close is Wednesday, December 30, 2020, due to short reporting (T+1). Remember, spreads consist of a long options leg and a short options leg. However, if you only hold individual long or short index options position (not a spread), then the standard long and short options deadlines apply, as spelled out above. To view a list of cash-settled index options, please click here


Furthermore, index options are Section 1256 Products. That means any open position (spreads and individual options) held from 2020 to 2021 will mark as a profit or loss based on the closing mark on December 31, 2020.