Turbo Tax generating numerous errors for covered calls sold...needs cost basis...

[bluemoon]

Sold about a dozen covered calls, imported data (finally...TT needs to get rid of whack-a-mole picture-based Captcha pronto...plus it is probably an ADA violation if one has visual impairment as some of the whack-a-mole images are grainy and not easy to distinguish... or at least provide option for text-based verification) and for cost basis it is blank resulting in error. Do I enter zero (0)? Federal review won't clear and keeps giving error...it is like an endless loop.

Should mention, only 2 calls out of the 12 got assigned. Rest, 10, expired without assignment (or worthless).

Thank you (image attached below)

[DaveF1006 · Accepted solution]

Yes, in most cases, the cost basis for a covered call is zero. When you sell a covered call, you receive a premium, but you don’t have an initial cost basis because you didn’t purchase the option—you wrote (sold) it. If the option expires worthless, the premium received is considered a short-term capital gain.

However, if the call is exercised, the premium is used to adjust the basis of the underlying stock. If you buy back the call to close the position, the difference between the premium received and the repurchase price determines the gain or loss.

In this case, you may enter "0" to move on with the program.

[bluemoon]

Dave,

Thanks for the well explained response. The best, clear, concise response. Much appreciated.