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

To: DDS-OMS who wrote (385)	1/7/1998 10:41:00 PM
From: Colin Cody	Read Replies (1) \| Respond to of 5810

Gary the cite for the warrant holding period is IRC Sec 1091, see my reply #233 for the details. BUT NOTE that this pertains to WASH SALES ONLY. e.g. when a loss is not recognized due to a WARRANT as one leg -- then the holding periods are aggregated together for determination of the long-term holding period. Not so if a CBOE Call Option is one of the legs... the DIFFERENCE seems to be that a call option is from an INVESTOR who wrote it, whereas a WARRANT is from THE CORPORATION who will receive a PAYMENT upon exercise and will ISSUE STOCK to you. . In a non wash sale situation the holding period starts upon EXERCISE of the warrant EXCEPT in cases where you may ALLOCATE some fraction to the acquisition of the warrant itself. Cites for this are: IRC Sec 1223(6) IR Reg 1.1223-1(f) Rev Rul 85-164 Rev Rul 62-153 and Rev Rul 62-140. These cites should give your CPA enough to determine if in YOUR CASE you may allocate some of the holding period to the acquisition of the warrant, and the rest to the exercise of the warrant... . Colin