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Non-Tech : Paired Trades and Hedging Strategies
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To: TimF who wrote (79)1/15/2005 10:02:29 PM
From: Ira Player  Read Replies (1) of 136
 
The basis for the new position will be at a lower cost so when taxes are eventually paid on it they potentially could be paid on a higher profit.

The basis of the new position is moved upward, placing the new position at a loss equal to the loss negated by the wash rule.

It is break even.

By the way, another one that gripes me... Government publications and the long term capital gains treatment indicate a overt bias toward long term investment. However, I cannot deduct all margin interest on borrowing used to maintain a long term investment, unless I generate gains (or dividends) equal to or greater than the deduction. They force me to take gains or I must postpone the deduction. This is a covert bias toward short term thinking.

Ira
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