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Subject:  Re: Wash Sale & Options Date:  12/22/1997  7:02 PM
Author:  TMFTaxes Number:  986 of 127536

<< 1) Are options treated as "like" securities with stocks? If I sell some stock at a loss and buy
is that treated as a wash sale also?

If so, would I just increase the cost-basis of the
purchased options?>>

The law states that if you have a loss sale, and enter into an option to purchase additional shares of that "identical" stock, then you have generated a wash sale with respect to the initial loss sale.

<<2) I buy and sell Nov expiration calls at a loss.
Within the 30 days, (when the Nov would expire anyways) I purchase some Feb calls. Is this a
wash sale? >>

Nope. At least I don't believe so. Based upon the regulations, I don't see these different options as "substantially identical" property. I believe that IRS intended to include options in the wash sale definition, but they have never written the regulations to interpret the law as such.

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