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Strategies & Market Trends : Income Taxes and Record Keeping ( tax ) -- Ignore unavailable to you. Want to Upgrade?

To: Wowzer who wrote (2351)	11/5/1999 12:16:00 PM
From: Topannuity	Read Replies (1) \| Respond to of 5810

Anyone know how investment clubs are taxed?

To: Wowzer who wrote (2351)	11/5/1999 5:06:00 PM
From: Colin Cody	Respond to of 5810

The date it expires or becomes substantially worthless.

To: Wowzer who wrote (2351)	11/5/1999 5:34:00 PM
From: Jon Khymn	Read Replies (1) \| Respond to of 5810

Question; when you sell covered calls when do you have to recognize the income? The date you sold it or the date the option expires? Simple answser: Recognize when you actually make or lose money(when you cover or option expires which ever comes first.) Let's say you sell 10 Dec. ABC calls at $7 today. $7,000 is in your bank now. 1 week later, ABC stock price falls so you cover 5 at $3 You rocognize $2000 at this point. At Dec. option expiration the value of option is $0. Then you recognize 500x7=$3500 at the time of option expiration. (or if the option price is up to $15, then recognize loss of 500x8=4000 at the expiration date) If this is not correct, please someone correct me. thanks.

To: Wowzer who wrote (2351)	11/5/1999 9:21:00 PM
From: Spots	Read Replies (2) \| Respond to of 5810

You recognize it on the date of the closing transaction, with some exceptions. The closing transaction is when the option expires, when it is exercised, or when you cover the short, whichever applies. Exceptions: If you sell deep in the money covered calls, you have made a constructive sale of the underlying security, according to the IRS. I wouldn't presume to say how deep; that would be for the tax experts. I THINK the general rule of thumb is more than two strikes in the money, but there are no doubt exceptions and arguable cases. Also I believe it matters what the closing transaction is, and in which year it occurs. Also if you enter a straddle there are other rules. Rules are good for you and help you too.