Message Font: Serif | Sans-Serif
No. of Recommendations: 0

If you buy a LEAPS equity call option, hold it for over a year, and do not establish an offsetting position during that year, any gain or loss will be a long-term capital gain or loss.

If you buy a LEAPS nonequity call option, such as a cash-settled option based on a stock index, it is subject to special "section 1256 contract" rules. These rules require the position to be marked to market at the end of the year and 60% of any gain or loss will be long-term and the other 40% short-term.

For more information see IRS publication 550.

Good Luck,
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.