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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Exacctnt who wrote (49198)	2/27/1999 2:31:00 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 132070

(Since you trade options frequently, here's a tax question. If one buys a call option and sells it within 10 days for a gain, then buys another call option on the same stock with it subsequently expiring worthless, all within 30 days, how do the tax rules apply? Do I declare only the gain on the sale and no losses? Or, since I am completely out of the stock, is the loss allowed?) You seem to asking if the wash sale rules apply to the loss on a call option. The answer in general is a solid 'maybe', but in practice it hardly ever matters, and in the case of the expired option, the answer is no. The wash sale rules could defer (not eliminate) the recognition of the loss if the exact same option contract is purchased within +/- 30 days of the closing sale (expiration). However, if no position in that exact option contract is carried over into the next tax year, which is certain since it has expired, the loss can be recognized in the tax year of the expiration. (Stock and/or deep in the money option contracts of different terms can interact with one another, but not here). Opinion only, worth the purchase price. -g- Regards, Don