West Palm Beach, FL asked in Tax Law for Florida

Q: I have a nice gain on 10 option contracts I purchased on open market (not related to employee programs or work)

that expire soon. The total holding time will be about 6 months. For discussion sake, i say I bought the options for 1 penny a share and are now worth $100/sh) . If I exercise the options I will make $1000. If I donate 1 unexercised option to a DAF I have set up they will accept a call option) and sell it upon receipt. IF they sell it for $100 (I am not sure of the actual price since they control the selling once it is donated but lets assume $100). Am I able to take a $100 ST deduction against exercised options if I sell the remaining 9 contracts and make $900 dollars ST gain.. So, come tax time, do I calculate my taxes as 900 (gain)- 100 (donated) for a net ST income of $800? I merely donated an asset (the 1 contract) worth $100 and never realized a gain on it. (I believe for stocks you must hold for 1 year ) How does it work for options? In 2019, when I donated a "call" my brokerage accounts showed a purchase but no sale. On my DAF it showed as a donation at the $they sold the call

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1 Lawyer Answer
Bruce Alexander Minnick
Bruce Alexander Minnick
  • Tallahassee, FL
  • Licensed in Florida

A: You need to see a stock broker not a lawyer.

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