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lnofeisone

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  1. I thought this was a fascinating read: https://palladiummag.com/2021/10/11/the-triumph-and-terror-of-wang-huning/ "Instead, they see Wang’s America: deindustrialization, rural decay, over-financialization, out of control asset prices, and the emergence of a self-perpetuating rentier elite; powerful tech monopolies able to crush any upstart competitors operating effectively beyond the scope of government; immense economic inequality, chronic unemployment, addiction, homelessness, and crime; cultural chaos, historical nihilism, family breakdown, and plunging fertility rates; societal despair, spiritual malaise, social isolation, and skyrocketing rates of mental health issues; a loss of national unity and purpose in the face of decadence and barely concealed self-loathing; vast internal divisions, racial tensions, riots, political violence, and a country that increasingly seems close to coming apart."
  2. I originally said deep ITM calls would be needed. That was wrong. ATM or OTM would be the way to go since both would fail the substantially identical test (delta != 1).
  3. Note that there is nothing about you needing to hold your options to expiry. Footnote 62, sheds some light on that ambiguity. What you are highlighting is another way to circumvent the wash sale rule. You can also buy super cheap deep OTM calls that go 31+ days out and bypass the wash rules. In either case, the taxpayer would be trying to gain a tax advantage at no substantial change of economic profile and any regulatory body will not look kindly on it.
  4. Thanks for this well thought out comment. Really adds to the knowledge of the board. I would encourage you to take a look at the article that @hyten1 posted. Scroll to page 25-26. Read the exact strategy I posted. So now you have two respectable sources that point to legal validity of the transaction. At what point do you concede?
  5. Started to buy more serious UNG put positions. Trash security in an overextended natural gas market. I'm also using the cover of the economist as my "do the opposite" proxy.
  6. Yes, we all have our perceptions. My perception was that your analysis lacked any serious depth, built on preconception that it's a simple issue, and lacking the appreciation of transaction complexities and nuances, backed by a barely a source (yes, fool.com is pop finance and qualifies as barely a source.). I can write all that off as having a discussion on a board but if you are going to pound that table strong, make sure you are not wrong. I assure you, you were not right. Trying to somehow change the subject and insinuate (borderline insult?) that I don't know what covered calls are is, both, disingenuous and hilarious. You assumed that I am would be gaslighting the IRS with my take on things. Even if we take your elementary understanding of the term "gaslighting" (which, and I'm going to take a leap of faith here, was not part of your vocabulary 10-15 years ago despite the age of the term): 1) Taxpayers have disagreements with IRS all the time. Until 1988, calls were not even considered securities and IRS lost. It's not gaslighting. It's disagreements. This is why we have courts. 2) Gaslighting is typically done by the entity in power. I assure you, I have very limited power over the IRS other than knowing the little realm of my domain down to science. In fact, the power imbalance is the complete opposite. Having said all that, for education purposes, here is a paper by tax partners from Davis Polk (some would say it's a reasonably respectable law firm). Here are their names - Lucy Farr and Michael Farber. Both are current practicing tax partners. So no anonymity of a "Deloitte partner" on some blog on nasdaq.com Take a read to appreciate the history of the wash sales rules, current(ish, circa 2002) issues (e.g., swap), the loop holes that are big enough to drive a dump truck through that are wash sales rules. Most of them untested, unsettled, and inconsistent. That includes that strategy steps that I laid out (not directly but inferred). I am happy to email you a copy if you don't have a subscription. https://heinonline.org/HOL/LandingPage?handle=hein.journals/jrlfin3&div=31&id=&page= 3 J. Tax'n Fin. Products 41 (2002) Dirty Linen: Airing out the Wash Sale Rules Feel free to respond (or not) but please 1) keep it to a source that is not your opinion 2) civil.
  7. Turns out options are not considered securities. In fact, I was pointed to a specific court case where IRS lost because of that. It's a moot point for our discussion because of TAMRA (1988) but so you have it for your reference: "In a Tax Court case, Gantner v. Commissioner (91 T.C. ... denied, 498 U.S. 921 (1990)), the court found that stock options were not securities for purposes of the wash sales rule."
  8. Repeating one last time. If you don't get it, you don't get it. It's fine. 1) Sell your stock at a loss (say you lost $10/share) <--applies to this sale 2) Buy a call option - you can buy a deep in the money call (say, $15). You have now triggered a washsale. Meaning you can't take a loss on your stock but your cost basis for the call has gone up to $25/share. 3) Buy your stock back 4) Sell the call at a loss <-- doesn't apply to this sale Honestly, we are now walking in circles and I'm going to call it a day.
  9. I'm not trolling nor am I saying that options are not securities. What I am pointing you to is the fact that everything in what you posted says "acquire" and the 4th step of what I posted is a sale.
  10. 1. Buy substantially identical stock or securities, 2. Acquire substantially identical stock or securities in a fully taxable trade, 3. Acquire a contract or option to buy substantially identical stock or securities, or 4. Acquire substantially identical stock for your individual retirement arrangement (IRA) or Roth IRA. The issue is not stock or securities. Step 4 is a sale of a call so no it doesn't. There is nothing here about sale of a stock/call/security. Anyway, how about we close this one. There is no $ to be made here. This is a legally valid strategy to bypass wash sale but an impermissible transaction (as aws said "substance over form") because you are reaping a tax benefit without changing an economic profile (I did tell you early on that this violates the spirit of the law). Any revenue agent worth their salt will call it as that (though I do wonder if they would see something like this if you just give a sheet of all the transactions).
  11. 100% agree. Hence I made this comment earlier on "Does this violate the letter of the law, likely not. Spirit of the law, absolutely. But you did ask how to avoid a wash sale rule."
  12. Again, what you are highlighting applies to step 1 not 4. 1) Sell your stock at a loss (say you lost $10/share) <--applies here 2) Buy a call option - you can buy a deep in the money call (say, $15). You have now triggered a washsale. Meaning you can't take a loss on your stock but your cost basis for the call has gone up to $25/share. 3) Buy your stock back 4) Sell the call at a loss <-- doesn't apply here
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