Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : From the Trading Desk -- Ignore unavailable to you. Want to Upgrade?

To: Monty Lenard who wrote (3054)	5/17/1998 8:41:00 AM
From: Monty Lenard	Read Replies (2) \| Respond to of 4969

CONSTRUCTIVE SALES OF APPRECIATED FINANCIAL POSITIONS --[In General] Holder of appreciated financial position generally must recognize gain on constructive sale of position after June 8, 1997. Constructive sale generally occurs when holder enters into offsetting transaction that eliminates risk of loss and opportunity for further gain on position and results also in increase in holder's basis to extent of gain recognized and beginning of new holding period for constructively sold appreciated financial position. There are exceptions for positions subject to mark-to-market accounting and transactions involving nonconvertible straight debt, as well as specified short-term hedges and private sales closing in one year. A taxpayer owning property that has risen in value normally does not realize or recognize the gain until he sells or exchanges the property. However, after June 8, 1997, a taxpayer holding an appreciated financial position generally must recognize gain when he enters into an offsetting transaction that substantially eliminates the risk of loss and chance for further gain on the appreciated financial position. Even though there is no actual sale, exchange or other disposition of the appreciated financial position, and the taxpayer still legally owns it, he is deemed to have made a constructive sale of the appreciated property. Monty