Taxes on DJX Options

rgowka1 · Feb 9, 2003

Can anyone tell me how DJX options are taxed in the US.. are they taxed like Future (60/40 rule) or are they taxed like equities....

BobbyMurcerFan · Feb 9, 2003

I'm almost positive 60/40.

hardrock375 · Feb 9, 2003

Quote from BobbyMurcerFan:

I'm almost positive 60/40.

What percent positive would you say you are?

BobbyMurcerFan · Feb 9, 2003

Page 21 of this booklet says it does, but it's from 2001, so I guess the treatment could have changed, but I doubt it. HTH

rgowka1 · Feb 9, 2003

thanks BobbyMurcerFan.

Based on pg. 37 and 38 of
http://www.irs.gov/pub/irs-pdf/p550.pdf

and http://www.cboe.com/TradTool/Symbols/SymbolDirectory.asp?MODE=IndxOptsNLeaps&POPUP=false

note the of DJX type is "broad"....

and

http://www.cboe.com/LearnCenter/pdf/TaxesandInvesting.pdf

I conclude that these are Section 1256 Securites, and hence 60/40 rule applies to the DJX Options...

trader42 · Feb 9, 2003

so this means that QQ options are also taxed 60/40?

hardrock375 · Feb 9, 2003

Quote from trader42:

so this means that QQ options are also taxed 60/40?

No, those are options on an Index Tracking Stock, and not an Index itself. They (QQQ options) are comparable to options on the DIA.

trader42 · Feb 9, 2003

rgowka1 · Feb 9, 2003

QQQ is considered to be an equity and hence options on QQQ do not fall under Section 1256 Securites.

trader42 · Feb 9, 2003

thanks rgowka1