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Posted by removeps-groups@yahoo.com on March 28, 2008, 9:21 pm
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> #1.
> I wrote somecoveredcallson my ESPP shares (qualified dispositions)
> in 2007. Thesecallsgot assigned. I guess I just need to add the
> premium to the total stock sale price and follow the regular process
> to split Ordinary Income and Long Term gain on this ESPP sale while
> reporting the taxes?
> Here are thecoveredcall details:
> # of ESPP stocks = 1000 (purchase price= $10)
> 5/2/07- sold 10coveredcalls, Expiration July/2007
> 7/20/07 - Got assigned and 1000 stocks sold at $17 each
Was the strike price $17, and cost on day of assignment greater than
$17? If so, then I'm guessing that the cost date is the date your
bought those 1000 shares, cost basis is the price you paid for the
shares, sale date and price is the 7/20/07 details above. But where
does the income from selling the options go? I'm guessing it would
also go Schedule D - sale details is the 5/2/07 stuff above, and
purchase date is none. So you would have 2 sets of positive income --
the first possibly long term, the second definitely short term.
> So, I just need to enter long term capital gain in schedule D and
> ordinary income(15% discount) in 1040. Do I need form 6781 here? I
> assume these are qualifiedcoveredcalls?? Please advice.
Sorry, no idea what a straddle is.
> #2.
> I bought back thecoveredcalls(sold on ESPP stocks) at a loss. Do I
> just need to enter this as a long term capital loss in Sch D?
Confusing, how can you buy back something that expired?
> details:
> # of ESPP stocks = 500
> 5/31/07- sold 5coveredcalls, Exp Oct/2007
> 10/17/07- bought back thesecallsat a loss
> Do I need to report any thing on form 6781 here?
You mean you sold calls short? If so, then it looks like an ordinary
Schedule D item.
> #3.
> I sold 10 nakedcalls(of the same company as ESPP stock but this time
> not acoveredcall but a Naked one) and bought them back on the same
> day at a loss. I guess this is not a Wash sale. Do I just need to
> report this as short term capital loss in Sch D?
> details:
> 10/17/07- sold 10 nakedcalls
> 10/17/07 - bought them back(or closed) at a loss
>
> When you look at #2 and #3 above, there are 3 activities on 10/17/07.
> Am not sure if FIFO/LIFO rule applies here in matching the
> transactions across #2 and #3.
Technically the wash sale rule applies on #2 (loss on 5 contracts is
disallowed as >=5 contracts where purchased 30 days before or after
the event). The disallowed loss is carried over to #3. As #3 was
closed out by the end of the year, it doesn't matter how you report it
as the total comes out the same.
But pay attention to Rich's comments. Trading in your own company
stock (day trading, short sells, calls, puts, short calls, short puts,
etc) may be disallowed, and could even raise trouble with the SEC.
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