Short Sales and Options Tax Rules

What this video covers

• Why the Internal Revenue Service (IRS) suspends the holding period when an investor buys downside protection before earning long-term treatment
• The 12-month threshold that separates short-term from long-term capital gains, and why "more than 12 months" is the exact phrasing tested
• Married puts: how buying stock and a put on the same day creates a single combined position and freezes the clock from day one
• Why a married put fully suspends the holding period (it does not pause and resume) and when the clock finally begins ticking
• Constructive short sale treatment: how buying a put on appreciated stock held 12 months or less resets or suspends the holding period
• The long-term exemption: why buying a put on stock already held more than 12 months has no holding period effect
• When the holding period clock resumes after the put is closed, exercised, or expires