Hi All,
I have two options tax questions
- If I hold a LEAP for 366 days and exercise and immediately sell am I taxed as long-term or short-term?
- If I hold an underlying for 366 days and get assigned on a covered call on day 366 am I taxed at long-term or short-term for the underlying component?
Posted by half_butterfly
1 Comment
Exercise is not a taxable event. Your cost basis for the stock is increased. The stock holding period begins on the date of exercise. You would be taxed at short term rates.
Selling a covered call before you have held to long term status can pause or even reset your holding period. Look up qualified and unqualified covered calls.
Talk to a tax specialist. I just googled this shit and should not be trusted in any capacity. I almost stayed at a Holiday Inn Express last week, but that’s as close to expert status as I have achieved.