How to Report Stock Options Taxes (8 Steps)

Review your brokerage earnings statement for the tax year (and previous tax years if necessary) and group together purchase dates and prices with the appropriate selling dates and prices.
Calculate and determine which options were short-term assets and which were long-term assets. Any option that was held for over a year is considered a long-term capital gain or loss.
Enter into line 1 of the 'Part I' Section of Schedule D the first short-term stock option transaction that was completed for the tax year. Options that are presently held will be reported in a future tax year. The description (column A) of the option must include the company name, the quantity of options traded, the type of option (Call or Put) and the expiration date (i.e. Dec 2009).
Enter into columns (B) and (C) the dates the option was purchased and sold, respectively. Notice that if the transaction was a short sale of the option, the sold date would precede the purchase date.
Enter into column (D) and (E) the sales price and the cost of the options, respectively. Ensure that commissions and exchange fees are included in these prices.
Calculate the gain or loss from the option transaction by subtracting the option cost (column E) from the sales price (column D) and enter the gain or loss into column (F).
Continue entering all the short-term option transactions that were completed during the tax year as described in the previous steps. If necessary, use Schedule D-1 (continuation sheet for Schedule D) to report all the transactions.
Enter into line 8 of the 'Part II' Section of Schedule D the first long-term stock option transaction that was completed for the tax year. Continue entering all the long-term stock option trades, following the previous steps for short-term option trades. If necessary, use Schedule D-1 (continuation sheet for Schedule D) to report all the transactions.