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Strategies & Market Trends : Options -- Ignore unavailable to you. Want to Upgrade?

To: taylorfife who wrote (150)	12/27/1999 2:21:00 PM
From: Poet	Read Replies (1) \| Respond to of 8096

Hi, My sense is that the IRA would see it as a wash, as it's the same stock.

To: taylorfife who wrote (150)	12/27/1999 2:50:00 PM
From: RoseCampion	Read Replies (2) \| Respond to of 8096

Can I sell the calls today and buy back at a different strike price tomorrow or is that washing? Option traders have been waiting for years for the IRS to issue regulations on this. You shouldn't hold your breath for that to happen anytime soon. <g> Until then, it's legally a grey zone - as my accountant liked to say, it's one of those "declare whatever you feel you can without blushing" areas. Personally, I feel if you roll to a different month and/or a different strike, you're pretty well covered to not trigger the wash sale rules. If you're conservative, do both (eg, trade Jan 50s for Mar 55s). -Rose-

To: taylorfife who wrote (150)	12/28/1999 12:39:00 AM
From: Didi	Respond to of 8096

A. McLean: "I want to sell some calls in an stock that are down 50% so that I can take the loss this year........ Can I sell the calls today and buy back at a different strike price tomorrow or is that washing?" LIKELY DISALLOWABLE TAX LOSS. SEE RULES BELOW. Not qualified under loss deferral rules ....................................... "Wash Sales You cannot deduct losses from sales or trades of stock or securities in a wash sale. Any gain from these sales is taxable as a capital gain. A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you: 1. Buy substantially identical stock or securities, 2. Acquire substantially identical stock or securities in a fully taxable trade, OR 3. Acquire a contract or option to buy substantially identical stock or securities." ..................................... "Straddles This section discusses the loss deferral rules that apply to the sale or other disposition of positions in a straddle. These rules do not apply to the straddles described under Exceptions, below. For information on what is meant by a "straddle" and a "position" in a straddle, see Definition of a Straddle, later. Loss deferral rules Generally, you can deduct a loss on the disposition of one or more only to the extent that the loss is more than any unrecognized gain you have on offsetting positions. Unused losses are treated as sustained in the next tax year. positions Unrecognized gain. This is: The amount of gain you would have had on an open position if you had sold it on the last business day of the tax year at its fair market value, and The amount of gain realized on a position if, as of the end of the tax year, gain has been realized, but not recognized. Example. On July 1, 1998, you entered into a straddle. On December 16, 1998, you closed one position of the straddle at a loss of $15,000. On December 31, 1998, the end of your tax year, you have an unrecognized gain of $12,750 in the offsetting open position. On your 1998 return, your deductible loss on the position you closed is limited to $2,250 ($15,000 - $12,750). You must carry forward to 1999 the unused loss of $12,750." irs.ustreas.gov