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Posted by nickra on June 12, 2007, 1:06 am
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Say I own 1,000 of XYZ and have for a decade or so ago. Big
capital gain, even withthe lower rate. Now, say I write some
ATM calls, 10, for 1 each let's say they expire in three
months, same tax year. My stock goes from 100 to 105 by day
of expiration. Instead of letting the stock get called away,
I buy the options back for 5. Now that is a loss (offset by
the gain in my stock, yes.) So, do I take a loss on buying
the options back? Any effect on the tax status of the stock
I own?
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Posted by Arthur Kamlet on June 18, 2007, 9:27 am
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> Say I own 1,000 of XYZ and have for a decade or so ago. Big
> capital gain, even withthe lower rate. Now, say I write some
> ATM calls, 10, for 1 each let's say they expire in three
> months, same tax year. My stock goes from 100 to 105 by day
> of expiration. Instead of letting the stock get called away,
> I buy the options back for 5. Now that is a loss (offset by
> the gain in my stock, yes.) So, do I take a loss on buying
> the options back? Any effect on the tax status of the stock
> I own?
You wrote some covered calls and bought them back to close
out the position at a loss. Yes, that's a loss. Report it
as short term loss on schedule D.
--
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 (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Seth on June 18, 2007, 9:27 am
Please log in for more thread options > Say I own 1,000 of XYZ and have for a decade or so ago. Big
> capital gain, even withthe lower rate. Now, say I write some
> ATM calls, 10, for 1 each let's say they expire in three
> months, same tax year. My stock goes from 100 to 105 by day
> of expiration. Instead of letting the stock get called away,
> I buy the options back for 5. Now that is a loss (offset by
> the gain in my stock, yes.) So, do I take a loss on buying
> the options back?
Yes; unless you have other capital gains, only $3,000 of
your $4,000 capital loss is deductible against ordinary
income this year, the rest carries forward.
> Any effect on the tax status of the stock
> I own?
No; you bought and sold (not in that order) a different
instrument entirely.
Seth
<< ------------------------------------------------------- >>
<< 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 (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Arthur Kamlet on June 19, 2007, 9:29 pm
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> Say I own 1,000 of XYZ and have for a decade or so ago. Big
> capital gain, even withthe lower rate. Now, say I write some
> ATM calls, 10, for 1 each let's say they expire in three
> months, same tax year. My stock goes from 100 to 105 by day
> of expiration. Instead of letting the stock get called away,
> I buy the options back for 5. Now that is a loss (offset by
> the gain in my stock, yes.) So, do I take a loss on buying
> the options back? Any effect on the tax status of the stock
> I own?
You wrote some covered calls and bought them back to close
out the position at a loss. Yes, that's a loss. Report it
as short term loss on schedule D.
--
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 (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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|
Posted by Seth on June 19, 2007, 9:29 pm
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> Say I own 1,000 of XYZ and have for a decade or so ago. Big
> capital gain, even withthe lower rate. Now, say I write some
> ATM calls, 10, for 1 each let's say they expire in three
> months, same tax year. My stock goes from 100 to 105 by day
> of expiration. Instead of letting the stock get called away,
> I buy the options back for 5. Now that is a loss (offset by
> the gain in my stock, yes.) So, do I take a loss on buying
> the options back?
Yes; unless you have other capital gains, only $3,000 of
your $4,000 capital loss is deductible against ordinary
income this year, the rest carries forward.
> Any effect on the tax status of the stock
> I own?
No; you bought and sold (not in that order) a different
instrument entirely.
Seth
<< ------------------------------------------------------- >>
<< 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 (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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