Thanks Colin..... this was supplied to me by IRS
Code Section 1091 1.1091-1 (a) (f) tax court decision
IRS told me, that on this basis, Index Options....such as on the SPX are not subject to wash sale rules --- at the time I asked, I was not asking about mark to market...so their response was based on a simple set of trades... I was just looking for confirmation, since a phoned answer by IRS is about as good in an audit as finding they owe you money.
Would appreciate a confirmation, if you could.That means....are index options subject to wash sale rules at any time....not just mark to market conditions. Certainly when mark to market is applied, all gains become ordinary income, and therefore are not subject to wash sale rules. I'm interested to know....under a capital gains scenerio...if index options are free of wash sale rules... vs. trading in options, say, of individual equities. IRS said they are immune, but thought I would ask you for a confirmation, if you don't mind.
For myself.... I have pretty much decided I will not elect mark to market..., if for no other reason than the potentiality of creating a huge loss on Sched C.......though my gains are great. I think such a move, aside from the self employment tax issues, would raise the red flag higher than a McCarthy commission....
I should also point out, there are issues as to when mark to market becomes effective....i.e. the date of the law, which was mid year or to stocks acquired anytime in the tax year.... secondarily, where a tax payer may not qualify in the next or future years as a trader, how will they treat stocks marked to market, particularly in a loss situation etc etc etc etc... gets complicated when mixing a loss as ordinary income and then a carry over or carry back against capital gain income.... what a mess.
I agree.....ALLLLL securites are subject to mark to market once elected including mutual fund shares etc ,,,,,,except for the following exceptions.... stocks which are long term in nature and acquired prior to the mark to market year.... or stocks designated as exceptions using the one day grace rule....meaning designated on the "day of trade" vis a vis some confirming vehicle establishing the designation. almost like "sale against purchase trade" though i don't think there is a similar order one could give a broker in this case.
Joel |
