Hi, my question concerns LEAPS. How does one account (tax-wise) for LEAPS sales? Hypothetically, say on Jan 3, 2000, Juan buys QCOM Jan 2002 LEAPS X=100, at a premium of 20, then sells them 18 months later with a premium of 40? Does he pay taxes on a long term gain or does he have to follow some 60/40 rule that i've heard about? Thanks in advance!
<<How does one account (tax-wise) for LEAPS sales? Hypothetically, say on Jan3, 2000, Juan buys QCOM Jan 2002 LEAPS X=100, at a premium of 20, thensells them 18 months later with a premium of 40? Does he pay taxes on a longterm gain or does he have to follow some 60/40 rule that i've heard about?>>Sorry...but I don't deal with options here in the message folder for a few reasons:1. Not part of the Foolish Filosophy2. Tax issues for options can get extremely complicated, and the posts generally become too specific, we don't get all of the required information, and there is always information that is left out. It's just too difficult to deal with. 3. Most people who deal with options should already know the rules. You wouldn't play with a loaded gun without knowing how it fires, right? Great discussions regarding options can be found in the Fairmark (http://www.fairmark.com) tax site. Additionally, other information on options can be found in IRS Publication 550. I would suggest that you check 'em both out. TMF TaxesRoy
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