# Writting Stock Options Tax treatment



## Doug Out West (Apr 25, 2010)

Having read up on this some parts are still unclear.

I know that you can treat profit or loss as income or capital gains as long as consistant for year to year.

For 2010 I have a gain on writting call options but I know in 2011 I will have losses.

So exactly what line is the income claimed and where would the loss be claimed next year? Thanks


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## atrp2biz (Sep 22, 2010)

This goes into pretty good detail on tax treatment of various positions.

http://www.m-x.ca/f_publications_en/brochure_fiscalite_kpmg_en.pdf


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## atrp2biz (Sep 22, 2010)

During the taxation year in which the option is sold, the writer is deemed to have disposed of a property whose ACB is NIL, realizing a capital gain equal to the proceeds.

IF ASSIGNED
However, for the taxation year in which the option is assigned, the capital gain is reduced to nil and the proceeds are added to the proceeds from the disposition of the underlying shares. The writer must file an amended tax return for the taxation year in which the option was written that excludes the capital gain from the write.

IF OPTION EXPIRES UNASSIGNED
No adjustment--capital gain remains in taxation year in which option is written.

IF OPTION IS REPURCHASED TO CLOSE
At the time the option is acquired, the holder is deemed to acquire the option at a cost equal to the premium paid, resulting in a capital loss in the repurchase year. The capital gain in the write year would remain.

These are my interpretations.


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## Doug Out West (Apr 25, 2010)

Thanks for the link. I think I'm pretty clear that I should treat as income and its of benifit to me while I make some money writting then buying back then writting and buying back in 2010 . Cleared 4K or so in 2011 its going to be a loss. And as to be consistent would rather be taxed as income in 2010 and then be able to write off larger loss in 2011.

But which lines would the income or loss be charged against. Starting entering my taxes and where to put option income is confusing me.


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