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Author: mike4047 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: LEAPS tax scenario Date: 1/19/2000 11:57 PM
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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!
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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 25586 of 121219
Subject: Re: LEAPS tax scenario Date: 1/20/2000 4:58 PM
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<<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?>>

Sorry...but I don't deal with options here in the message folder for a few reasons:

1. Not part of the Foolish Filosophy
2. 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 Taxes
Roy


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