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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: k.ramesh who wrote (9114)	11/20/1998 3:11:00 PM
From: Cesare J Marini	Respond to of 14162

I believe that CCs are taxed when the position is closed. I've written CCs on stocks that I've owned for a while, and it's been a good way to make some side money and further reduce net cost. I don't often look to get called out. Joe

To: k.ramesh who wrote (9114)	11/20/1998 4:05:00 PM
From: Mike Maxton	Respond to of 14162

Any profit or loss from writing calls or puts accrues when the option expires or closes. See the URl below, an excerpt below. irs.ustreas.gov >>>Writers of calls and puts. If you write (grant) a call or a put, do not include the amount you receive for writing it in your income at the time of receipt. Carry it in a deferred account until: 1.Your obligation expires, 2.You sell, in the case of a call, or buy, in the case of a put, the underlying stock when the option is exercised, or 3.You engage in a closing transaction. If your obligation expires, the amount you received for writing the call or put is short-term capital gain. If a call you write is exercised and you sell the underlying stock, increase your amount realized on the sale of the stock by the amount you received for the call when figuring your gain or loss. The gain or loss is long term or short term depending on your holding period of the stock. If a put you write is exercised and you buy the underlying stock, decrease your basis in the stock by the amount you received for the put. Your holding period for the stock begins on the date you buy it, rather than on the date you wrote the put. If you enter into a closing transaction by paying an amount equal to the value of the call or put at the time of the payment, the difference between the amount you pay and the amount you receive for the call or put is a short-term capital gain or loss. mike maxton

To: k.ramesh who wrote (9114)	11/20/1998 6:08:00 PM
From: Herm	Respond to of 14162

You got some great responses from the others on your questions. All would add is this. Having a tax problem is a good problem to have in this country. It means you are making a good $$$$$ income. You then can worry about buying a bigger house to shelter some more, increasing your tax shelter annuity, etc. and you can give a great deal away to charities and a church of your choice to help reduce your taxes. The year I don't have much taxes is the year I'm going to be sweating bullets because the cash flow money machine has dried up! :-)