I wrote a long term put and repurchased it out 1.5 years later. To my surprise on my realized gain&loss it shows as a short term gain, NOT a long term gain. I spoke to my broker (Merrill Edge) who reported the inquiry to the internal tax reporting department. 1 week later Merrill got back to me and said that when shorting options, regardless of when the position is closed or when it expires, it will always be taxed as a short term gain???
This is so confusing to me. I tried looking it up on the IRS website but can't find any resources confirming this. Did Merrill fuck up or am I in the wrong? I'm pissed because they will report this as a short term gain to the IRS, and if I manually change it on my tax return I'm afraid of an audit. Can anyone confirm for or against what Merrill is telling me?