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Strategies & Market Trends : IRS, Tax related strategies--Traders
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To: RavMan who wrote (802)4/14/1999 1:46:00 AM
From: Nandu  Read Replies (1) of 1383
 
One transaction last year has me totally stumped as to how to report it on Schedule D. Please help. I am sure it is easy for the regulars here.

Bought DELL on 9/11/98 at 55 13/16.
The same day sold covered calls
(September expiration strike price 57.5)
on the entire amount at 1 13/16
On 9/18/98 the stock was called away from me.

Do I report this as one or two sales on Sched D?

My reading of Pub 550 is that the covered calls I sold increase the sale price of the stock, rather than decrease the basis. This leads me to believe that I should not report the option transaction separately, but just report the stock sale with an adjusted sale price. However I am worried that

a) I am not reporting the option sale.

b) The sales price I report is different from what the broker's 1099-B shows, and this might trigger something for the IRS computer.

Thanks in advance for the advice. I am new at options and had only this one options transaction last year.
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