How do I report Income from selling covered calls?

Question

I held a position in XYZ company last year. Sold calls against it. Some expired worthless, others I closed the positions for profits. How is this income reported?

Answer 1

First you need to determine if the calls you sold were "qualified" covered calls. To do that see the definition of a qualified covered call on page 59 of IRS Publication 550. (The URL for the publication is in the "source" area.)

If the covered calls were qualified, simply report them on Schedule D as Jo Blo indicated. For the options that expired worthless, use the expiration date as the date purchased and a purchase price of $0.00

For covered calls that were not qualified, you should fill out Form 6781 and transer the results to Schedule D.

Answer 2

On Schedule D

You will need basic info to fill out the form, when you bought, when you sold, how much paid, how much sold for.
Very complicated form to do by hand, easy with tax software.

Answer 3

you have to file form 1040 long form and then report them on schedule C since you didn't get any w-2 forms. on chedule C you have to report you're total income then fill in what applies such as meals,utilities,supplies,rent,repairs,advertising,etc.whatever applies. you will also need to file schedule SE/self employment tax, yet if using a software it will be filed by it's self when u do schedule C.