SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 163.32+2.3%Nov 21 9:30 AM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: RoseCampion who wrote (61395)1/11/2000 4:40:00 AM
From: Labrador  Read Replies (1) of 152472
 
>>I'll go further than that. Sell a deep-in-the-money (or maybe even a just-enough-in-the-money) call against long common, and it is considered a "constructive sale" under the regs, and you will have to pay capital gains as if you'd sold the shares then and there, and you will suspend or eliminate completely any long-term holding period you've built up in owning the shares.<<

I do not believe that there have been any regulations issued under this 1997 tax act provision.

The statute and underlying legislative history do not address option positions, although they do address forwards and futures. In determining whether an ?in-the-money? option will be treated as a constructive sale, Congress anticipated that IRS regs will provide a specific standard that takes into account many of the factors described with respect to collars, including the yield and volatility of the stock and the period and other terms of the option.

To date, unchartered water, and since IRS generally is prohibited from issuing regs that are retroactive unless IRS issues the regs within 18 months of the date of enactment of the provision, you're probably OK to write in-the-money options without running afoul of the constructive sale provisions.

I'd also suggest that one check with their accountant for their views -- these above are mine.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News