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Non-Tech : Radica Games (RADA) -- Ignore unavailable to you. Want to Upgrade?

To: Alski who wrote (6512)	12/17/1998 1:27:00 AM
From: Ben Beale	Read Replies (1) \| Respond to of 7111

OT: Alski, You asked about tax treatment of covered calls. While I claim no expertise in tax, I've done a little research on this question. First, I asked my broker. I was referred to the margins department (!!) for an answer. They told me that the IRS does not require 1099's on option trades, only on stock trades. They mentioned something about the 'honor system.' It seemed unfathomable to me that Uncle Sugar would have missed the chance to collect his 36% of such transactions so I called the IRS' toll-free help line. There I learned that what the brokerage told me is essentially correct except that, starting in 1998, there was supposed to be a requirement to report half the transaction (the close or expiration of a position). I was passed through 4 representitives in order to get that pearl of wisdom and basically learned that the service has, at a very rudimentary level, absolutely zero understanding of puts and calls. I also attempted to research any applicable sections of the Internal Revenue Code on point in the CCH (Commerce Clearing House) tax reporter and could find none. I'm sure that's not correct, but as I said, I'm no tax expert. Reported cases, of course, are specific to each taxpayer but CCH carried headnotes on a case I've given to my accountant. The rule, at least in that case, is that options can be used to adjust the taxpayer's basis in a stock so long as the taxpayer is long or short the underlying security. If you don't have an interest in the security, then there is no basis to adjust and each transaction has whatever tax consequences would otherwise apply to the loss or gain. If you do own the security, it appears one may, but is not required to, apply the option transaction as an adjustment to one's basis. However, once an election is made (to treat the option trade as an adjustment or as a stand-alone transaction), the taxpayer is required to apply that election consistently. This thread's been quite helpful to me over the last year and if I get some time, I'll take another look in CCH and see if there are other details (such as whether the taxpayer's election applies only to a particular stock or to all stocks in the taxpayer's portfolio) that might be of interest. I appologize for the lengthy answer; I usually get paid by the word....<ggg> r/s Ben

To: Alski who wrote (6512)	12/17/1998 9:34:00 AM
From: swedelo	Respond to of 7111

Mr. Alski, On the contrary I see this as an excellent opportunity to add position for long term purposes. Short term I just don't see too much down side ( $12.5?shr=5PE). As to the tax question, you got me!. I have a very close contact that is an IRS manager and my best friend is a partner in a local CPA firm. I will ask them both, but I can tell you what their answer will be......." I don't know, I'll have to research it". A RANDOM THOUGHT: Wondering how many others here noticed the addition of Mr. Hu to the board? Mr. Hu is the former CEO and President of Zindart ltd. Another Hong Kong Based toy company with manufacturing in China. Zindart (ZNDTY) has 8 million shares out and is selling at 6 1/4. I found this addition to RADAF's management somewhat interesting given managements discussion during CC about what to do with their cash position. I believe their answer was maybe buy some more shares back and we ar actively pursuing ACQUISITION possibilities. Talk about synergy! ZNDTY is about 2/3 the size of RADAF with odm deals with MAT ( they make hot wheels and collectable cast cars along with many other things including paper products...hmmmm, Girltech?). RADAF could buy ZNDTY at a 33% premium of 8 1/2, or 68 million dollars. RADAF registered 800k shares in July and should still have about 1/2 million shelf shares from original IPO they could use in a cash and stock deal. 1.3 million shares would equal approx 18 million , they have about 33 million on books and ZNDTY has about 22 million cash = 73 million! Just wondering if anyone else noticed. Best Wishes, Swedelo