Z, I think you are incorrect to include hedging with puts as a constructive sale. Shorting against the box was definitely attacked, primarily because it was used by "the rich" as a means of indefinitely deferring taxes. However, a constructive sale, last I heard, still required that one give up substantially all of the upside potential as well as protecting substantially all the downside. Put buying clearly would not meet this requirement. Furthermore, even a collar, properly structured, would not be a constructive sale. Of course, a collar where one sells at the money calls and buys at the money puts, would be a constructive sale as all upside and downside is eliminated. Still, puts alone as a hedge would not. Unless, of course, you have found some new rules, in which case please post a link.
Regards,
Bob |
