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When does the clock start for long term gains rate after exercising warrants?


wescobrk
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Just double checking here as I think this has been posted before, but does the long term capital gain rate when you buy a warrant or when you exercise the warrant?

 

For example, buy warrant in Feb 2021 exercise in October of 2021, would the long term cap gains rate of 15% kick in Feb of 2022 or October of 2022?

 

I know any responses aren't tax advice and to consult tax advisor but any help is appreciated.

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Although, see the comment on 'cashless' exercise:

 

https://casetext.com/analysis/when-does-my-capital-gains-holding-period-start-for-warrant-shares

 

If you exercise your warrant in a cashless exercise, there is uncertainty as to the right answer. Some taxpayers argue that the cashless exercise of a warrant is a recapitalization event itself entitling the taxpayer to tack their holding period back to the date of the acquisition of the warrant. See the attached letter, in which the New York State Bar Association states: “If a cashless exercise constitutes a recapitalization, the warrant holder’s holding period for the stock received upon exercise would generally include the holding period for the warrants.”

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