Semi-Equips - Buy when BLOOD is running in the streets! Message Board

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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!

LRCX 154.74

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3:59 PM EST

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To: Ira Player who wrote (3312)	11/6/1997 1:18:00 PM
From: Jonathan Edwards	Read Replies (1) of 10921

A short note on tax issues. If you write a covered call against a stock that is eligible for LT capital gains treatment and it goes into the money, don't let it get called. If it gets called, you have a ST gain via the premium and a LT gain at the call price. You pay tax at you marginal tax rate on the ST and 20% on the LT. This is incorrect. If you sell a covered call that is exercised, the premium is added to the amount realized from the sale of the stock and the entire gain (option premium plus call price less basis) is LT. See IRS Pub 550 page 55 under "Writers of Calls and Puts".

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