Robert G. Leslie and Marilyn B. Leslie - Page 12

                                       - 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 liquidation                 

Page:  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