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Strategies & Market Trends : Options 201: Beyond Obi-Wan-Kenobe
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To: Dan Duchardt who started this subject4/13/2004 4:40:40 PM
From: Howard R. Hansen  Read Replies (2) of 1064
 
Question about the tax consequences when one sells an option and the option expires worthless. On page 48 in J. K. Lasser's "Investor's Tax Guide" it says "The holding period on options is generally less than a year, but some option contracts cover longer time periods; in such cases your holding period can be either short or long term, as with any capital asset." Then on page 54 it says "If you sell an option and it expires worthless, it is taxed as a short term gain in the year it expires, even if it covers a period more than one year."

Anybody have any clues on how to reconcile the discrepancy between these two statements? Which IRS document explains the tax consequences for selling puts that expire worthless?
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