7555. How are puts and calls held by an investor treated for income tax purposes?Nuco Employeercline202014-06-27T19:04:00Z2014-06-27T19:04:00Z11971129Summit Business Media92132414Site Map/Investments/Options/Equity Options/Stock OptionsTaxFactsDefaultArticle2006-01-04T00:00:00Z120791048-00-tf2.xml1048.00;#1921;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 2How are puts and calls held by an investor treated for income tax purposes?
5400.00000000000TaxFactsDefaultArticle2010-01-14T22:08:29ZSBMEDIA\moss-admin7555. How are puts and calls held by an investor treated for income tax purposes?“Puts” and “calls” (whether listed or unlisted) are capital assets in the hands of an investor.See IRC Sec. 1234(a); Treas. Reg. §1.1234-1(a). Furthermore, puts and calls on individual stocks are “equity options” and, thus, are not subject to the mark-to-market tax rules as are “nonequity options.”IRC Secs. 1256(g), 1256(b). The tax treatment of equity options depends on the circumstances of their exercise, lapse, or termination (See Q 7556 through Q 7574). See Q 7575 and Q 7576 for the treatment of nonequity options.The contemporaneous holding of a call option and granting of a put option with respect to an equity interest in a pass-through entity may constitute a “constructive ownership transaction” under IRC Section 1260 (See Q 7608 to Q 7609).