Is a covered call tax treatment the same as a short sale?

September 15, 2006

Date:  Wed, 14 Jun 2006
From:  Walter

Is selling a covered call considered by the IRS to be a short sale?

Thank you


Date:  30 Jun 2006

Hello Walter,

No. A covered call is different from a short sale. A short sale is a fixed obligation to sell something that will be delivered in the future. A call is an option to sell, which may or not be exercised in the future, even if you possess the underlying asset to be sold in a covered call.

Good luck!

Mike Gray

For answers to new questions, subscribe to our newsletter, Michael Gray, CPA's Tax & Business Insight by filling out the form below.

Home    Newsletter Archive    Introducing Michael Gray, CPA    Articles    Tax FAQ   Need Help?    Other Links

Michael Gray, CPA
2482 Wooding Ct.
San Jose, CA 95128
(408) 918-3162
FAX: (408) 938-0610
Hours: 8am - 5pm PDT Monday - Friday

Find us on Facebook
Follow me on Twitter
Connect on LinkedIn
Our Blog

Subscribe to Michael Gray, CPA's
Tax & Business Insight

We respect your email privacy