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URL:  http://boards.fool.com/sarah-i-am-most-definitely-not-an-expert-not-a-28820701.aspx

Subject:  Re: options tax reporting emergency Date:  10/13/2010  9:27 PM
Author:  CheersSRX Number:  111267 of 121061

Sarah:

I am most definitely NOT an expert; not a tax accountant. So take my advice at your own risk. But I have written covered calls and reported them on tax returns. In fact, to be accurate, a highly paid tax accountant completed my Schedule D based on the information I provided.

I totally think the latter is correct, not the former. You have a $1 long term gain on the sale of the stock and a $1 short term gain on the option. To be literal, you most definitely did not sell the stock at $24, you sold it at $23. I don't know of anything in the tax code that would instruct you to change the actual sale price. Wouldn't make logical sense, and as you indicate, would make the tax reporting tricky, since there is a long-term component and a short-term component.

Now, that said, our Government is not known for it's common-sensical approach to such things. In fact, quite the opposite. But all that said, I do believe the second part of your post is the proper tax treatment.

Cheers!
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