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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Conan who wrote (41961)	2/9/2001 3:47:21 PM
From: Andreas	Respond to of 70976

Conan; The option premium is not taxable as ordinary income until the earlier of (i) the expiration date of the option if the option is not exercised or (ii) the date on which the option is exercised. For example, if one owned 1000 shares of Amat today and that person sold today the January 2002 leap for $8.00 then that $8,000 of option premium would not be included into income until January of 2002. Therefore, the $8,000 would appear in that person's 2002 tax return filed on April 15, 2002 (or later with extensions). The exception, is if the purchaser of the call decides to exercise the option in 2001 then that will trigger a taxable event and the premium would then be included in the 2001 tax return (not a very likely event). I hope this helps.