7566. What is a “married” put? How does the taxation of a “married” put differ from that of an ordinary put?Nuco Employeercline202014-06-27T15:12:00Z2014-06-27T15:12:00Z23922239Summit Business Media185262614Site Map/Investments/Options/Equity Options/Stock OptionsTaxFactsDefaultArticle2006-01-04T00:00:00Z120901059-00-tf2.xml1059.00;#1921;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 2What is a “married” put? How does the taxation of a “married” put differ from that of an ordinary put?25500.0000000000TaxFactsDefaultArticleSBMEDIA\moss-admin2010-01-14T22:36:05Z7566. What is a “married” put? How does the taxation of a “married” put differ from that of an ordinary put?“Married” puts are a special exception to the treatment under IRC Section 1233 of the purchase of a put as a short sale. There are three requirements for a put to be treated as a “married” (or “identified”) put, as follows: (1) it must be purchased on the same day as stock the investor intends to use in exercising the put; (2) the option must specify that such stock is to be used in exercising it, or the investor’s records must identify within 15 days after the acquisition of the property the stock that is to be so used; and (3) if the put is exercised, it must be exercised through the sale of the property so identified.IRC Sec. 1233(c); Treas. Reg. §1.1233-1(c)(3).In other words, the stock is “married” to the put. A married put may be listed or unlisted. Unlike ordinary put options, the acquisition of a married put is not treated as a short sale for federal income tax purposes.IRC Sec. 1233(c); Rev. Rul. 78-182, 1978-1 CB 265; Rev. Rul. 71-521, 1971-2 CB 313. If a married put is exercised by delivering stock other than the identified stock, the short sale rules will apply as explained in Q 7565.In the event the put expires without being exercised, its cost will be added to the taxpayer’s basis in the stock with which the option was identified; it will not be a capital loss in the year of expiration as would be the case with an ordinary put option.IRC Secs. 1233(c), 1234(a)(3)(C); Rev. Rul. 78-182, 1978-1 CB 265.It is not clear whether a married put that falls within the definition of a tax straddle will be subject to the straddle rules (See Q 7586 to Q 7602), nor whether one that falls within the definition of a conversion transaction will be subject to the conversion transaction rules (See Q 7603 and Q 7604). It also is unclear how the sale of an unlisted married put or the liquidation of a married listed put in a closing sale is treated for income tax purposes; however, it would seem that the short sale rules would not be triggered and a gain or loss would be realized on the sale as discussed in Q 7562 and Q 7563.