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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: andydaoust who wrote (3426)2/26/2002 5:29:46 PM
From: Dominick  Read Replies (1) of 5205
 
Andydaust:

I know nothing about taxes but here is a paragraph from the book "Tax Facts 2" ,(there are 2 books 1 and 2),by the National Underwriters Company. This is for the year 2000.

Page 45 # 63 How is the writer of a call taxed when the option is exercised by the owner?

"When a listed or unlisted call is exercised and the writer thereof is called on to sell the underlying stock, the writer adds the amount of the option premium he received for writing the call to the total striking price to determine the total amount realized in the sale. Then to the extent that the total amount realized exceeds the writer's tax basis in the stock sold, he realizes a capital gain; if his tax basis exceeds the total amount realized he has a capital loss. The nature of such gain or loss generally depends on the holding period of the stock sold. Irrespective of the time the call was outstanding."

There's no mention of ITM or OTM.

Boy am I glad I don't have to get involved with this crap.

Dominick
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