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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 165.07-1.0%3:59 PM EST
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To: Geoff Nunn who wrote (32783)6/20/1999 5:24:00 PM
From: Labrador  Read Replies (1) of 152472
 
>>In addition to the savings in transactions costs, you can also reduce your capital gains taxes by buying shares for delivery. If you buy shares in the market, the cost basis will be the market price of the stock. This of course will be higher than the cost basis on the shares you already own. How many shares you need to buy at assignment, in order to avoid paying capital gains taxes, can be computed mathematically. Even if your call options are fully covered, you're still generally better off to buy some new shares in the market. When these are delivered along with some - not all - of the shares you already own, this is how you go about reducing your capital gains tax. <<

Isn't the general rule that you sell shares on a first purchase, first sold basis? Consequently, unless you use specific identification, which requires confirmation from your broker on the shares you sold, you will be deemed to sell the shares that you already owned (not the recently purchased high-basis shares). Further, be aware of the "wash sale rule," which can disallow a loss if you buy more shares or call options within a 30-day period before or after the shares are sold at a loss. Contact you competent tax professional before you undertake the transaction if you are looking to minimize taxes.
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