How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: JoAnn McCracken who wrote (6250)	12/30/1997 11:55:00 AM
From: mc	of 14162

JoAnn, on options, the taxes are due in the year that the position is closed. If you buy back the CC then that ends it. You would list that as a separate transaction on your tax schedule, not an adjustment to your basis. However, if you let the stock get called away then you adjust the sale price of the stock upward by the amount of the option premium less fees and commissions. Additionally, because the options income is not reported, this will cause a discrepancy between what is reported to the IRS by your broker and what you show on your tax schedule. If you have any stocks that got called away, you should attach an explanation to your capital gains tax schedule explaining that the difference in reported and actual is the adjustment for an option. Gary

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