Arthur Kamlet <-To[at]panix.com> wrote:

- quote -

Certainly not on MTM!

Dick

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <38a1b138-19d3-4455-8f87-71a7f7650dca[at]i18g2000prf.googlegroups.com> ,
removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:
- quote -


See page 57, first paragraph on that page, which tells you to use the
dates of the underlying security when you exercise an option.

http://www.irs.gov/pub/irs-pdf/p550.pdf


And where did you ever learn that tax regulations are supposed to
make sense?
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Nov 20, 8:02 am, kam...[at]panix.com (Arthur Kamlet) wrote:

- quote -

It doesn't make sense that the acquisition date of the security
determines the holding period. Say you bought a call that expires in
two years at $5 each. Just before your options expire, two years
later, your call is in the money and each option is worth $25, or
$2,500 for one contract. If you sell now, you have long term gains of
$20 per option, taxed at 15%. But suppose you exercise the options,
and then own the corresponding shares. If you decide to sell right
away, you still have a gain of $2,500 per 100 shares. Except now your
gain is short term, and taxed at say 33%. This does not make sense to
me, as both are fundamentally the same thing.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <1beed932-3348-4a86-b19c-6c6bd3414817[at]r36g2000prf.googlegroups.com> ,
removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:
- quote -




No


- quote -


No.

Let's say you purchase a call option. Several things can happen
including


i) you later sell it -- the holding period determines
if this is long term or short term.


ii) The call expires worthless -- the treatment is the same as
above assuming it was sold on the expiration date for $0.

iii) You exercise the call -- in that case the option premium
you paid is part of the eventual gain or loss when you
sell the underlying security and the acquisition date of
the security determines the holding period.


Put options are similar, but see IRS Publication 550 for details
on handling equity options.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Are gains on options held more than one year long term? I'm thinking
there are two logical answers:

(1) All gains and losses on options are short term.

or

(2) All gains and losses on put options are short term. Gains and
losses on call options follow the rule for long stocks. If a call
option is exercise, the cost basis date (ie. purchase date) is the
date the options were purchased.

Maybe I'm way off!

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >