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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Allen Furlan who wrote (3095)11/30/2001 5:10:19 PM
From: Dan Duchardt  Read Replies (1) of 5205
 
Allen,

If one closes a call sold against a stock at a loss, so as to retain the stock, can the short term loss be used to offset other gains?

I expect there are others here who know this better than I, but I believe anytime you buy back a call, or it expires worthless, you have a gain or loss based on the call itself. A short-term loss when you buy back is like any other short term loss, and can be used to offset other gains, short-term first, then long-term if any is left over. It's when calls are exercised, or if you sell ITM and the IRS guidelines put it in the category of "constructive sale" that they have an effect on the underlying position for tax purposes. Exercised calls are treated as an adjustment to the basis of the stock.

My CC activity has been in IRAs, so I've never had to worry about actually reporting it.

Dan
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