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?
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).
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.
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
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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