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Strategies & Market Trends : The Covered Calls for Dummies Thread -- Ignore unavailable to you. Want to Upgrade?

To: LemurHouse who wrote (3082)	11/26/2001 11:01:05 PM
From: Dan Duchardt	Read Replies (1) \| Respond to of 5205

Andrew, Is your objection to shorting against the box based on the 30 day wash rule, or is it something specifically against shorting against the box? I see the problem with the wash rule (althlough presumably this can be overcome by waiting more than 30 days to cover the short?) but I still don't see a specific prohibition re shorting against the box. Shorting against the box is not prohibited, but the advantage it used to afford you to defer payment of taxes has been eliminated. It has nothing to do with the wash sale rule. I believe it was for the 1997 tax year and following that the IRS defined a number of actions it classifies as "constructive sales" that force you to treat such sales as if you had sold the underlying position you hold. It includes shorting against the box, and selling DITM calls. You can get it straight from the horses mouth here: irs.gov Find the section titled Constructive Sales of Appreciated Financial Positions It's a fairly complicated set of rules that involves holding times, etc., but the intent is to keep you from using the old "trick" of shorting against the box, and similar strategies to defer taxes. Dan