Silicon Investor (SI) -- The First Internet Community

STOCKTALK

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.

Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: johnd who wrote (28529)	8/23/1999 9:29:00 PM
From: blankmind	Read Replies (1) \| Respond to of 74651

JohnD, - I'm taking an educated guess.... but here goes.... - #1 - if you exercised a call - then the cost of the call gets added to the basis of the stock you bought; and there's no taxable transaction until you sell the shares of stock. So no taxable transaction if you still hold the shares. #2 - what do you mean by "option premium?" You mean call option proceeds from selling a call? If so, you'll pay tax when you buy the call back or they expire.

To: johnd who wrote (28529)	8/23/1999 10:39:00 PM
From: djia101362	Respond to of 74651

johnd, here a table to anwser your options related tax question. hope this helps. irs.ustreas.gov

To: johnd who wrote (28529)	8/23/1999 10:54:00 PM
From: taxman	Respond to of 74651

"I excercised 10 contracts of MSFT" it is my understanding that when the option you held long was exercised, the cost of option would be added to stock basis and the holding period would start at date of exercise. no tax consequences on exercise. so your basis in each share would be 70 (split adjusted) plus cost of each leap adjusted for the split. no tax consequences until you sell the stock. the stock sale would be long or short term capital gain or loss depending on how long the stock was held from the date of exercise. for more information and to verify what i've said see the tax section on the cboe site. if you sell a covered call, gain or loss on closing the call out by buying it back or having it go worthless is short term gain or loss. if exercised the proceeds received when the option was sold is added to the sales proceeds from the stock. the gain or loss on the stock sold upon exercise is long or short term capital gain. so if you sell a 100 option for 7 and it is not exercised, you have a short term 7 gain. if exercised you would subtract your basis in the stock from 107 to determine your gain or loss. again check it out on cboe to be sure. regards