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Author: Arniefl Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121313  
Subject: Covered calls Date: 8/24/2005 10:34 PM
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Is the income you receive from covered calls reportable on your income tax? If so it on the 1099 that the broker issues at the end of the year?
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Author: czarinav Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 80511 of 121313
Subject: Re: Covered calls Date: 8/24/2005 11:13 PM
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You do not report covered calls until the second half of the transaction occurs...........if in the next year, for example, you report it then (because you will not know the outcome until it expires, is exercised, or bought back).



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Author: czarinav Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 80512 of 121313
Subject: Re: Covered calls Date: 8/24/2005 11:15 PM
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The sale of a covered call does show up in the 1099 of year you sold it. But, see my earlier post for the actual reporting of the option.

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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 80515 of 121313
Subject: Re: Covered calls Date: 8/24/2005 11:22 PM
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The sale of a covered call does show up in the 1099 of year you sold it. But, see my earlier post for the actual reporting of the option.

Options sales generally do NOT appear on Form 1099-B. However, you are still responsible for reporting the gain/loss on the transaction once it is closed.

Ira


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Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 80516 of 121313
Subject: Re: Covered calls Date: 8/25/2005 12:22 PM
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If you terminate the covered call you sold by delivering your stock, you report the purchase and sale of the stock and deduct the sale price of the call from your basis (so that the stock sale matches your 1099-B. and the gain includes your sales proceeds). The same applies if you purchase new stock to cover the call, but the dates are for the stock you purchased and delivered.

If the call expires the expiration date is the purchase date and the price is Zero. Sales price is what you were paid for it. The sales date will preceed the purchase date, which is O.K. Your profit is the price you sold the call for.

If you repurchase the call handle it the same as the above for an expiration except that the purchase price is not Zero.

None of this will probably be on your 1099-B except the sale of the stock if you delivered it. ed

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