Steve, as promised to your interesting question.
You would be amazed at the lack of IRS and judicial activity
regarding the "wash sale" rules. This is interesting in and of
itself.
In any case, it appears that it was not until 1988 that Congress
changed the law to have the wash sale rules apply to options. Must
have been a field day for folks before then!
Your question seems to be answered in IRS Pub 550. Therein, they
state that the wash sale rules do not apply to 1) regulated futures
contracts, 2) foreign currencies, 3) Non-Equity options, and 4)
Dealer options. The focus here is a non-equity option, defined as
including broad based stock index options (the example given refers
to the High Tech Index).
The non-equity option is controlled by the "market to market"
provisions. As I understand it, the index options are treated as if
they were sold on the last business day of the year, but, again,
not subject to the wash sale rules. Further, I understand these
transactions are reported on Form 6781 and you may want to secure
a copy of the form and instructions.
Hope this helps. Maybe some better expert can expand upon this!
P.S. To Tommy, we are dealing with IRS issues and not SEC issues. To
all, today is the last day for tax loss selling (Yippie!) in 1997.
But, we still have to deal with the fools that don't know this. The
weekly MACD on GE turned bearish for the first time in a while - my
proxy for the Market. Not a good sign! The good news is that there
will be a great buying opportunity shortly. Keep your gun powder dry!
And finally, TO ALL FELLOW DUDES, I wish you and yours Health,
Happiness, and Prosperity (after-taxes) in 1998!!! Merry Christmas!!!
Peace on Earth!
Berney |
