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Technology Stocks : CMGI What is the latest news on this stock?
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To: Mark Peterson CPA who wrote (15939)1/23/2000 2:32:00 PM
From: Sowbug  Read Replies (1) of 19700
 
Mark, a slightly off-topic tax question for you:

I got McMillan's Options as a Strategic Investment about a week ago and have been going through it, and I saw this disturbing statement on page 820:

If a stock holder buys a put, he would normally do so to eliminate some of the downside risk in case the stock falls in price. However, if a put option is purchased to protect stock that is not yet held long enough to qualify for long-term capital treatment, the entire holding period of the stock is wiped out.

Huh? So I've owned an Internet stock for 11 months and I'm terrified of a sudden drop, so I buy short-term puts and then sell the stock two months later, and it's treated a short-term capital gain even though I've held the stock for 13 months?

This is the third edition of the book, copyright 1993, and I've never heard this tax rule before. Is it true?
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