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

To: Colin Cody who wrote (2173)	4/23/1999 8:17:00 PM
From: Spots	Respond to of 5810

>> So it seems that if you held a stock for 10 years and on Dec 20th went short against the box, and then unwound it all on January 2nd, you'd have deferred the gain for a year, but it would now be short-term???!!! Naw, no way. Not even the IRS is that perverse. You just can't EXTEND the holding period while short against the box. Also, the PUT rule only applies to stocks that are not already long-term when you buy the put. I can actually remember where I read the put rule; in fact two places: I first read it in McMillan's "Options as a Strategic Investment" and then confirmed it in an IRS pub of some stripe. Thankfully, I have forgotten which <g>. BUT once a stock is long term, it's long term. Nothing resets you back to short term, or at least in this arena. As of my last reading, of course <g>. AND if I understood it of course <gg>. AND if the moon is on the waxing phase of course <ggg>. This is beginning not to be funny :(. I was aware of the "married put" exception. McMillan explains it. That put rule is really nasty because it does reset the holding period to zero, as I later confirmed in the IRS pub. The married put is such a limited exception that it is almost useless to my mind. Essentially, if you buy a put on a stock you hold not long term, you're dead for the holding period. It seems to apply to ANY shares you own short term, willy-nilly; no identification allowed. Maybe I misread that, but it looks like you could hold 100,000 shares of xxx short term, buy 1 put contract on 100 shares, and reset the holding period on the whole kaboodle. I hope I misread it. I have decided not to marry any such puts. I will remain a put bachelor for life. I want no part of 'em <g>. BUT (don't correct me if I'm wrong <g>), once it's long term, it's long term: Put it, call it, sell it, short it, you're safe. I think. Spots