Bernie & Ibexx, OFF TOPIC
The holding period must be more than one year for long-term gains treatment. You start counting on the day after you acquire the property.
In the example you gave, you can sell on August 14, 1997 or later and you will qualify for long-term gains. If you sell earlier, you will provide extra help in lowering the deficit. < g >
Also, I believe Ibexx may be in error in his advice that selling short against the box now will allow you to close your position on August 14 and qualify for long-term gains. I believe the rule is that the holding period is suspended while such hedging transactions (involving substantially the same securities, including puts) are outstanding, to the extent of the number of shares shorted or otherwise hedged. I believe you will find that in any good tax guide, such as Lasser's. [Or the IRS publication on sales and exchanges of assets.] The rule is ancient, and was made specifically to prevent one from converting a short-term gain into a long-term gain by simply shorting against the box or otherwise hedging the securities.
As Ibexx has indicated, you should review the expected provisions of recently negotiated tax bill, because the last versions [the different ones passed by the House and Senate] did further limit your options: if you short or engage in a multitude of hedging transaction, it may be treated as a sale of the underlying securities. I assume this provision will be in the final bill. This provision may be retroactive to May 7, 1997 (as is expected to be the case with the tax rate cut provisions). [Congress shall make plenty of ex-post facto laws. < g >]
Best regards,
Arno |
