""Option property
Your holding period for property you acquire when you exercise an option begins the day after you exercise the option.
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Holders of calls and puts
...If you sell the call or the put before you exercise it, the difference between its cost and the amount you receive for it is either a long-term or short-term capital gain or loss, depending on how long you held it...""
irs.ustreas.gov
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""Sec. 1234. Options to buy or sell
TITLE 26, Subtitle A, CHAPTER 1, Subchapter P, PART IV, Sec. 1234
STATUTE
(a)
Treatment of gain or loss in the case of the purchaser
(1)
General rule
Gain or loss attributable to the sale or exchange of, or loss attributable to failure to exercise, an option to buy or sell property shall be considered gain or loss from the sale or exchange of property which has the same character as the property to which the option relates has in the hands of the taxpayer (or would have in the hands of the taxpayer if acquired by him)"".
fourmilab.ch
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If I sell the options, the gain is treated as long term, since I have held the option for longer than a year.
Correct.
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If, however, I exercise, and then sell the common in 2 months, is the entire gain from the sale of the common considered a short term gain (since I have held the common for less than a year)?
Short-term gain. Good luck, Neal.
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