- 12 - short (February) position a before tax loss of $25.60 per ounce. Your after tax gain on the long contract would be approximately $19.52 per ounce, and your after tax loss on your short contract would have been approximately $12.80 per ounce, if you follow the liquidation principles described in the answer to question #9 above. The combined after tax gain would be $6.72 per ounce, or $672.00 net after tax profit per spread. 11. Would the same results be realized with other choices of dates? The results that would have been achieved with other choices of dates would be different. However, the principles are the same if these conditions apply. (1) The contracts are closed out after the expiration of the six months capital gains holding period. (2) The contract on which you have a gain is closed out in a way which will qualify for capital gains tax treatment, and (3) the contract on which you have a loss is closed out in a way which will qualify for ordinary income tax treatment. 12. Precisely how do I meet conditions (2) and (3) in question # 11? If there is a gain in your long position, you should qualify for capital gains treatment by going short in the same delivery month. If you have a gain in your short position, you could sell it to an unrelated third party and qualify for capital gains treatment. If you have a loss in either your long or short contract, you should cancel it. If you do, your loss will be an ordinary loss rather than a capital loss. * * * * * * * 15. Will I be required to close out my long and short positions simultaneously? By no means. They are separate contracts. You may choose to liquidate them in other ways. For example, you may wish to actually take delivery of the gold on your long contract and close out your short position by offsetting it with an identical long contract. Other combinations of liquidationPage: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011