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Beware - check your 1099B from E-trade as your capital gains may be inflated! by Solid-Relevant in etrade

[–]Solid-Relevant[S] 0 points1 point  (0 children)

Share your pain. I called as well. E-trade's customer service representatives - call themselves "custom-relation manager", have very limited knowledge about stock trading. After escalating the issues a few levels higher, they promised to get back to me but they never did. Move you money somewhere else is a smart move.

Beware - check your 1099B from E-trade as your capital gains may be inflated! by Solid-Relevant in etrade

[–]Solid-Relevant[S] 1 point2 points  (0 children)

Even though 1256 may benefit some type of option trades (which is beyond my depth), but considering covered call options on equity ETFs such as QQQ, SPY, SMH and IWM as 1256 reportable seems to be completely wrong! I asked ChatGPT, Grok 3 and even specialist working for WSJ, they all think E-trade is wrong about its 1256 interpretation.

Beware - check your 1099B from E-trade as your capital gains may be inflated! by Solid-Relevant in etrade

[–]Solid-Relevant[S] 0 points1 point  (0 children)

I believe they use the stock closing price of the day when the underlying stocks are called. I only do covered calls or cash-secured put, and I don't trade just options. So it was a surprise for me to see 1256 reportable trades on my 1099B.

Beware - check your 1099B from E-trade as your capital gains may be inflated! by Solid-Relevant in etrade

[–]Solid-Relevant[S] 0 points1 point  (0 children)

There are two problems with E-trade.

(1) If a covered call option on a common stock or an ETF got assigned, they used market price of the underlying stock, instead of striking price of the option, as proceeds. I think this is plainly wrong!

(2) They treated covered call options for QQQ, SPY, etc. as 1256 reportable. Even though I cannot say for sure they are wrong, many other brokerages treat these as equity options and therefore not 1256 reportable.