Hi folks,
So I invested in 2020, with BRDY (Dry Bulk Shipping) close to the bottom as everything was frozen with COVID, and sold most of it when it went up when shipping was blocked and overloaded.
I got a nice profit. No complaint here.
So I have some short-term/long-term gains on the position, but when I (finally) received my K1, I also am getting some 1256 contracts and straddles for BDRY. My understanding is that it's marked to market at the end of the year. Now, for 1256, 60% is marked as long-term, and 40% is marked as short-term.
So I feel like I am getting double taxed here.
I am getting taxed on the profit and on the 1256 contracts.
Here is an example of what I mean:
June 1s, 2020. Say I buy some BDRY shares for $100.
December 31, 2020. These shares are now worth $200. So marked to market increase by $100. ($60 long-term, $40 short-term).
May 1st, 2021. I am selling my BDRY shares for $250.
Tax:
* $250 - $100 = $150 short term for the profit (OK)
* And plus, $60 LT, and $40 ST for the 1256 contracts.
So it's as if I am taxed on $190 ST + $60 LT while only having $150 profit.
Does anyone have experience with that?
Do I just tell my CPA to adjust my cost-basis on my initial shares (from $100 to $200) as that's my new basis from the 1256 contracts? Thoughts?
It seems if I bought BDRY with options through a synthetic long (short PUT, long call), I would not have to worry about all these shenanigans. (or maybe not :) ).
Submitted October 17, 2022 at 03:37AM by _WhatchaDoin_ https://ift.tt/GyDA06m
