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Options Cost Basis reduction on underlying Security

Questions about updating prices or transactions in Fund Manager

Postby divinest » Tue Feb 23, 2021 6:46 am

Hi Mark, Wanted to see if you have any recommendation or ideas on how can one track the reduction (or increase) in cost basis to account for sold covered calls or puts. To be more specific if one sold a call for the underlying security and expired worthless based on options faq can add a transaction to purchase at zero dollars, however that does not reflect the reduction in cost basis on the security (assuming sold as covered call). Thanks for your time.
divinest
 
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Postby Mark » Tue Feb 23, 2021 7:06 am

Hi divinest,

Your tax cost basis is affected by:

1) The tax cost basis of the purchase(s) or transfer in(s) for the sold shares.
2) Account Fee or Return of Capital type distributions. The Account Fees are optionally included in the basis, but Return of Capital are always included. For the Account Fee option, see "Options / Report Preferences... / Capital Gains / Include Account Fees in Basis".

I'm not a tax advisor or in a position to offer advice on how to change an underlying stock's basis based on covered calls, but the above are the tools available to change it if you deem it appropriate.
Thanks,
Mark
Fund Manager - Portfolio Management Software
Mark
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Postby divinest » Tue Feb 23, 2021 12:31 pm

Thanks Mark that works, however for Account fees appears we can input only negative (DR) values - is there a way to include CR (positive) values. The goal is not for tax, but to keep reducing the cost basis for taking into account of any Covered calls income for the stock.
divinest
 
Posts: 141
Joined: Tue Sep 05, 2017 7:07 pm

Postby Mark » Tue Feb 23, 2021 1:06 pm

Hi divinest,

There are 2 types of cost basis in FM:

Tax
Out Of Pocket (OOP)

Which one are you asking about? My prior answer was referring to how you can affect the tax cost basis. Any type of positive (non-reinvested) distribution will lower your OOP basis.

You can record any type of distribution either negative or positive. Typically Account Fee types are negative, but it is not a requirement.
Thanks,
Mark
Fund Manager - Portfolio Management Software
Mark
Site Admin
 
Posts: 9972
Joined: Thu Oct 25, 2007 2:24 pm
Location: Chandler, AZ

Postby divinest » Tue Feb 23, 2021 1:15 pm

Thanks Mark - looking for Out Of Pocket (OOP) Acct fee would work for the use case.
divinest
 
Posts: 141
Joined: Tue Sep 05, 2017 7:07 pm


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