§ 1092(c)(4)(A)

not a straddle for § 1092(a)

UNDECIDED

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  1. 1

    § 1092(c)(4)(A) Ambiguous

    ALL OF

    Subparagraph (A) also applies for the rest of § 1092 and for § 263(g); (E) turns it off only for § 1092(a), so this gate tracks § 1092(a)

    If—

    “all the offsetting positions making up any straddle consist of 1 or more qualified covered call options and the stock to be purchased from the taxpayer under such options, and” § 1092(c)(4)(A)(i) needs Step 2 a qualified covered call UNDECIDED
    “such straddle is not part of a larger straddle,” § 1092(c)(4)(A)(ii)

    such straddle shall not be treated as a straddle for purposes of this section and section 263(g).

    UNLESS Step 3 the year-end rule applies: (A) is off for § 1092(a) UNDECIDED

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  2. 2

    § 1092(c)(4)(B)

    a qualified covered call

    ALL OF

    For purposes of subparagraph (A), the term “qualified covered call option” means any option granted by the taxpayer to purchase stock held by the taxpayer (or stock acquired by the taxpayer in connection with the granting of the option) but only if—

    “such option is traded on a national securities exchange which is registered with the Securities and Exchange Commission or other market which the Secretary determines has rules adequate to carry out the purposes of this paragraph,” § 1092(c)(4)(B)(i)

    “Which the Secretary determines” leaves this to Treasury. Cited by Reg. § 1.1092(c)-3(a), Reg. § 1.1092(c)-3(b)

    “such option is granted more than 30 days before the day on which the option expires,” § 1092(c)(4)(B)(ii)
    “such option is not a deep-in-the-money option,” § 1092(c)(4)(B)(iii)
    “such option is not granted by an options dealer (within the meaning of section 1256(g)(8)) in connection with his activity of dealing in options, and” § 1092(c)(4)(B)(iv)
    “gain or loss with respect to such option is not ordinary income or loss.” § 1092(c)(4)(B)(v)
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  3. 3

    § 1092(c)(4)(E)

    the year-end rule applies: (A) is off for § 1092(a)

    ALL OF

    Subparagraph (A) shall not apply to any straddle for purposes of section 1092(a) if—

    “the qualified covered call options referred to in such subparagraph are closed or the stock is disposed of at a loss during any taxable year,” § 1092(c)(4)(E)(i)
    “gain on disposition of the stock to be purchased from the taxpayer under such options or gains on such options are includible in gross income for a later taxable year, and” § 1092(c)(4)(E)(ii)
    “such stock or option was not held by the taxpayer for 30 days or more after the closing of such options or the disposition of such stock.” § 1092(c)(4)(E)(iii)

    For purposes of the preceding sentence, the rules of paragraphs (3) and (4) of section 246(c) shall apply in determining the period for which the taxpayer holds the stock.

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