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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures -- Ignore unavailable to you. Want to Upgrade?

To: Patrick Slevin who wrote (3905)	9/11/1998 6:33:00 AM
From: Tom Trader	Read Replies (4) \| Respond to of 44573

A tax-related question to anyone who knows the answer I have certain core holdings that I have held for years which I don't wish to liquidate but do wish to protect. I talked to my broker who suggested "shorting the box" -- the negative to doing this is that it would impact my holding period when I cover the position. I asked him if I could short the stocks that I hold -- as opposed to "shorting the box". Then when I covered, a gain or loss would be recorded based on the price at which I short the stock vs the price when I cover the short. He told me that should work--in that it would not affect the holding period or result in a tax gain based on my cost basis on the core positions. What I am asking is whether I can avoid impacting the holding period or having to recognize a gain based on my cost basis in these long term holdings. For example, suppose my original cost basis in INTC is 10--and I want to protect the position against a significant decline --can I short INTC, in say a different account, and then cover for a gain or loss in due course without the IRS contending that what I have done is effected a constructive sale of my original holding?? I have, to date, used other hedging mechanisms to protect these holdings and it is expensive. I will continue to do this if there is no alternative--but would like to investigate whether the aforementioned methodology would be viable.