SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Income Taxes and Record Keeping ( tax )
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Elroy who wrote (5805)4/5/2024 11:21:26 AM
From: TheNoBoB  Read Replies (1) of 5810
 
Re: MLP exercised options

There is different tax treatment of section 1256 contracts and regular equity options.
Indeed. But where does it say the exercised 1256 option premium is not reflected in the cost basis of the underlying? There's plenty of places in Publication 550 where exceptions are indicated for Section 1256 because of the 60/40 treatment, but I don't see that in the section about cost basis. Without that adjustment, it's an infinite money glitch. Every 1256 trader would just churn MLP options to offset their 1256 gains and never pay taxes. I'm pretty sure the tax code isn't set up for that (but I'm willing to step up my SPX trading if it is!!)
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News