Message Font: Serif | Sans-Serif
No. of Recommendations: 0
I posted the below in the SA Board for IDCC but was referred to this board for better chances of a detailed response. Will appreciate any guidance.

All - Need a bit of help -

Background: A little over a month ago, I sold IDCC Sept 2011 $40 calls (when the stock was at $35-37 range) to protect against an unfavorable ruling against NOK. I have the same number of shares at a cost basis @ $25 or so. So in effect, the call is a covered call. Needless to say, today, my stocks have more than tripled in value, but my options are keeping up pace and negated all that nice jump. Overall, have a 60% gain (over many years - held IDCC since '05 I think, which translates to 7-9% annual return), so am not losing money BUT extremely sad to have missed out on this. Another red-flag on my investing style - first NFLX, now this. Haven't mastered the art of selling as much as buying in.

Desired Goal: Anyway, I want to close my option position and sell my shares on the same day as two separate transactions because my stock gains are long-term, and my option losses are short-term.

Question: Wwould wash-sale apply here because the transactions are done on the same day (hence within the 30/60 day window) on the same security? (OR) Can I actually list the option loss as a short-term loss and list stock gains as a long-term gain in Schedule D and do calculate them individually?

I have AAPL option gains enough to offset IDCC option losses - so from a short-term gain/loss perspective, I can have the +ve and -ve number offset each other - close to zero. And I have the IDCC stock gains to get me long-term gains rates that & hopefully get long-term TAX rates.

Any perspective (or) prior experience would be appreciated...


PS: Understand the "please check with your tax advisor" type disclaimers, but am interested in the community perspective on the above situation.
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.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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.