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OIC Offers Revised "Taxes and Investing" Pamphlet to Reflect Impact of Tax Legislation on Options
Chicago—February 25, 2005
The Options Industry Council (OIC) announced today that a new, updated version of its Taxes and Investing pamphlet is now available on the OIC Web site at http://www.888options.com/store/taxguide_new.pdf. The new version, revised by Richard J. Shapiro, Tax Partner, Ernst & Young LLP, explains the impact of new federal income tax laws, through February 2005, affecting options investments including new developments in connection with Exchange Traded Funds.
The new guide also specifically discusses the affect of the American Jobs Creation Act of 2004. This act changes the taxation of investments in a number of technical, but important, ways. First, the required holding period for an individual to qualify for the lower taxed (up to 15 percent) dividend rules does not take into account any time during which the shareholder is protected from the risk of loss by writing an in-the-money qualified covered call on the dividend paying stock. The Act makes various changes to the so-called "anti-straddle rules," including repealing the stock exception to the definition of "personal property." The Act also allows the identification of certain offsetting positions of an "unbalanced" straddle (that is, one position offsets only a portion of one or more other positions), and it makes other generally favorable changes to the timing of recognized losses on such identified straddles by adding previously deferred losses to the basis of built-in gain assets. This change effectively allows proportionate recognition of the deferred losses as the built-in gains are disposed.
OIC is a non-profit association funded by the U.S. options exchanges and The Options Clearing Corporation. OIC's free resources include: The Investor Services call center at 1-888-OPTIONS, an educational Web site at www.888options.com, evening seminars throughout the continental United States and Canada, educational literature and software.
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