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Financial Planning / Tax Strategies


Subject:  Re: capital gains when you short Date:  7/13/1999  9:09 PM
Author:  fling Number:  17281 of 127987

Thanks for the info.

Bob already posed the question I wondered about: AMT.

Well, I am aware of AMT's existence, but I haven't run any numbers. All I know is that I'm probably over the limit. Does that make this whole thing moot? Should I sell some options to get the gains categorized as income instead of triggering AMT? I've assumed that the AMT rate on the options would be less than the income tax rate (especially for this year).

People normally buy ISOs on the premise that they're going up; they short stock on the premise that it's going down. Doing the two actions in concert sounds like shooting from the hip and getting yourself in the foot.

When I exercised and held, I believed it would go up. Well, I was right, but it's gone up a lot faster than I expected, so I was considering whether I could use a short sale as a hedge. My thinking was that if it corrects, everything's hunky dory. If it keeps going up too far, I cover with the options, and it's just as if I originally sold them.

You would be well advised to talk to somebody in whom you can place your trust, and talk about the amounts involved, do some what-if scenarios, and so on.

Okay, thanks!

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