ERICOPOLY

page 29: Of course, the loss would not be deductible if expiration of the option was itself a wash sale. Happily for the taxpayer, though, there are two reasons why Section 1091 seems not to apply when the option expires. First, the purchase of stock on November 2 is more than thirty-one days before the option expires (i.e., on December 11).62 Second, the stock in the new lot is not substantially identical to the option (i.e., since the option is out-of-the-money).6 https://scholarship.law.columbia.edu/cgi/viewcontent.cgi?article=3484&context=faculty_scholarship

I was literally dying after having your assurances and then reading ahead to where you wrote "keep it to a source that is not your opinion". Rules are for others but are not for you.

ROTFL

We have our own perceptions. I saw someone making a snide remark about "at least understand the meaning of the word" while in the same breath saying "if you're going to make it personal", and then twice ending the conversation by restating his point (having the last word) and then asking everyone if the conversation can be wrapped up. And the second iteration of this was prefaced with a statement that looked like "I've tried to explain it to you guys... here is one final time I'll repeat myself and if you don't get it you don't get it... " It was condescending was my viewpoint on that.

It only makes a claim that the loss is moved into the calls.

The NASDAQ article does not make any claim whatsoever about a magic 31 day waiting period exception. It doesn't make that claim anywhere! If such a magic existed in the tax code, and if that was the intent of the article, surely they would have mentioned it at least one time.

I am in the camp that the editor should have corrected the article to specify WHEN the calls can be sold. It is left to the reader to make assumptions. Someone who doesn't understand the 31 day waiting period will get snared by a second wash sale. I believe Deloitte was only suggesting to move the capital loss into a tearoff stub (the call). Get rid of the loss as if one is taking out the garbage (use a call as the garbage bag).

Looks like my last post crosses paths. I remember your posting that article and I'm familiar with it because I also posted a link to that article in the past few months.

And also one was constructive sale rules and one is wash sale rules. But in both cases they seem to agree that sufficiently out of the money puts don't cause issues.

Additionally, the article you linked was about a collar and in the collar you are writing the call options, whereas this quote from the NASDAQ article is specifically about purchasing call options.

I feel that anything in that article needs to be examined closely because the editor didn't catch the error of omission in not waiting 31 days before selling the adjusted call for a loss. So, where there is one cockroach there may be more.

I would not use it myself. Looks like a sham.

One thing to verify is whether a far-out-of the-money option is "substantially equal". I saw it mentioned in the NASDAQ article that a purchase of all calls of any strike will trigger the wash rule. quoting: "In a put sale, the government will declare a wash sale when the put position is substantially identical to the stock – that is, when there is a high likelihood that the put will be exercised (unlike the call purchase rule that damns any call purchase)."

Check with a CPA to verify my words because I'm not a tax expert by any means.

If you buy the calls for 1 penny per underlying share and if you had a $15 loss in the shares, you'll harvest a tax loss of $15.01 per share.

Instead of pointing out what was wrong I thought it better to offer an amended form that resolves the issue.

Two amendments may bring the board into agreement: 1. Sell stock at a loss 2. buy calls that are far out of the money so they'll cost mere pennies 3. Buy shares back 4. Wait 31 days 5. Sell calls and take the loss

And that sale in the 4th step is the wash sale.

Not closing it out with those statements. A sale of a call for a loss replaced with common stock is a wash. Period.

Perhaps the Deloitte reference was originally intended to address a circumstance of buying calls as a transaction that closes out existing covered calls.

yup

The reason I called it gaslighting is that the argument rests on denying the objective reality that no covered call exists. That isn't personal.

Why not quote sections related to short sales and use those rules whenever you sell stock if the rules fit your agenda? 1. Buy stock 2. Sell stock. If you ignore step 1, you have a short sale. So it's "mathematically identical" to a short sale beginning after step 1. So use the short selling rules.

The IRS specifically said "covered call". You don't have one.

That's what gaslighting is, if you want to make t personal. And now you can add projection too.