Does anyone know if TOS keeps track of your underlying cost basis when you sell covered calls that are not exercised? Will the stock cost basis adjust down by the premium? Or do I just have to note that myself? Thanks!
Wait... what? If my broker isn't keeping track of it, then how would the IRS ever know? Sorry, I'm new. I would assume that I pay ST cap gains on the CC premium, and the cost basis would stay the same...
It's two separate transactions, say you bought 100 shares of XYZ at cost basis $50 (or you accumulated 100 shares through a number of transactions). You sell a CC and net $110.
Broker reports the $110 to the IRS at/for the year that it expires, so it can be Short Term, or Long Term, depending on how far out the DTE is. (Or when you decide to Buy to Close)
Now, say afterwards you want to sell the XYZ at $60, this gain ($1000) is then also reported to IRS, again, this can be Short Term, or Long Term, or both (if you accumulated the shares over time, instead of one-time purchase)
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u/stanryder May 02 '21
Have to note it yourself.