Tax Treatment by Option Type - Summary

What this video covers

• Why standard equity options default to short-term capital gains and the long-term equity anticipation security (LEAPS) exception that only buyers, never writers, can claim
• How the 60/40 rule splits every gain and loss on broad-based index, foreign currency, and yield-based options into 60% long-term and 40% short-term regardless of holding period
• What the mark-to-market rule does to open 60/40 positions on December 31, and why Form 6781 shows up on the exam
• The "calls add, puts subtract" cheat code for exercise and assignment cost basis, and when the result is cost basis versus sale proceeds
• Why no gain or loss is recognized at the moment of exercise, and how the premium folds into the stock transaction instead
• How the 30-day wash sale rule extends to buying a call on the same underlying, plus the married put holding-period suspension
• Bonus rules tested often: the 3-year loss carryback on 60/40 contracts and the wash sale exemption for marked-to-market options