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

To: Joey Smith who wrote (10425)	4/13/2001 2:50:09 PM
From: hobo	Respond to of 10876

Well... remember that whatever "we" the tax payer do is really up to us and our respective tax counsel, so in essence, it becomes a matter of interpretation. In a way, I have agreed to the manner in which I treat each transaction independent as then it becomes easier to keep track of them. When you connect them, then you need to keep track of the two of them, the option and then the underlying. When you start trading several times, soon you will realize what a nightmare is to keep all the paper work in line. On the other hand, I do like your approach in which you delay paying taxes on the option portion of an exercised transaction. The big problem I have with this approach is that then there is no consistency in treatment of the transactions i.e.: you will have 2 different treatments: 1). those options that are open and closed in the same year are treated as independent transactions, and then 2). those which are exercised are then "connected" (I believe "married" is a better term), to the underlying. It may very well be that both methods are accepted by the IRS, however I prefer the simpler one given the volume of transactions I execute and the paper work involved. It is possible that the "interpratation" is correct on both instances. At this point is where I let the tax man do their work, I will ask him on Monday (or whenever I can catch him, since by then, the man may be on his way to a well deserved vacation after the weekend)