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To: MrCash who wrote (3583)	2/22/1998 5:21:00 PM
From: Investor2	Respond to of 42834

I'm don't know the answer to your question on the cost basis adjustment if you sell covered calls. However, there is a thread on SI with many knowledgeable tax experts who probably do. Subject 17266 Let me know what you find out. Best wishes, I2

To: MrCash who wrote (3583)	2/22/1998 9:49:00 PM
From: Trebor	Respond to of 42834

> but I hear that this will make you take a capital gain on the stock and readjust your basis.< You would only take a capital gain if you end up selling the stock. What I try to do is either let the covered call expire worthless or buy it back for less than I sold it for, but hold on to the stock. In either case the proceeds are treated as ordinary income (at least that's how my accountant does it). But if you do end up selling the stock, then yes, you'll have to pay the capital gains tax -- in a non-IRA account. If it's in an IRA, then it's not a problem. (Disclaimer -- I'm no tax expert. Hopefully my accountant is and so far he's kept me out of jail).