Colin, do you mind another hypothetical? Your help has been greatly appreciated.
Dec 1, you BUY 1,000 shares of INTC at $100
Dec 2, you SELL 1,000 shares of INTC $120
Dec 3, you BUY 1,000 shares of INTC $110
Dec 4, you BUY 200 CONTRACTS of INTC Dec 100s at a premium of $1.00 (total cost w/o comm. = $20,000)
Dec 19 the INTC Dec 100s expire worthless
Dec 24, you SELL 500 shares of INTC at $100
Dec 26, you BUY 500 shares of INTC at $80
Dec 29, you SELL 500 shares of INTC at $90
Dec 29, you STILL OWN 500 shares of INTC today, which ends the day at $90. Due to the perceived January effect, you believe INTC will hit $120 by Jan. 15 and you are hesitant to sell any more because you are concerned about the wash rule.
The question is what capital gains tax do you have, if any?
I am a pure novice when it comes to taxes, but here's my guess:
First, the initial buy/sell transaction results in a short term capital gain of $20,000
Second, with 1000 share purchase, basis = $110
Third, with short term loss of $20,000 from the option, creates yet another new basis for the 1000 shares of $130.
Fourth, the sale of 500 shares at $100 each equals a short term loss of $15,000 and still maintain a cost basis of $130 for the remaining 500 shares
Fifth, the purchase of 500 more shares now creates a new basis of 1000 shares at $105.
Sixth, the sale of 500 shares at $90 results in another short term loss of $15,000
Current Status if NO other transactions take place:
the short term capital gain ($20,000) is offset by the two short term capital losses of $15,000 each leaving a net loss $10,000 for the year - of which you can take $3,000 for `97 and carry the $7,000 loss forward.
Any thoughts? |
