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Strategies & Market Trends : Picks of the quarter

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To: longnshort who wrote (2426)	1/18/2007 11:46:25 AM
From: Elroy	Read Replies (4) of 20435

OT - tax question for US taxes. Can anyone advise me on how to account for the following trade as regards taxable income? July '06 I bought Dec calls for stock ABC with strike $10 for $1 each. In December '06 when the calls expired, ABC stock was $20, and rather than sell the calls I just exercised them and bought ABC stock for $10 each. I still hold the stock, but plan to sell it in '07. Do I have a taxable gain on that transaction to report for '06 taxes, or does the realization of a gain occur when I finally sell the ABC stock I bought for $10, and is now worth $25?

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