Based on the microscopic model including spin-orbit coupling, on-site Coulomb and Hund's interactions, as well as crystal field effects, we investigate the magnetic and optical properties of Sr(2)IrO(4). Taking into account all intermediate state multiplets generated by virtual hoppings of electrons, we calculate the isotropic, pseudodipolar, and Dzyaloshinsky-Moriya coupling constants, which describe the experiment quite well. The optical conductivity σ(ω) evaluated by the exact diagonalization method shows two peaks at ~0.5 and ~1.0 eV in agreement with experiment. The two-peak structure of σ(ω) arises from the unusual Fano-type overlap between the electron-hole continuum of the J(eff)=1/2 band and the intrasite spin-orbit exciton observed recently in Sr(2)IrO(4).