Donating Protected puts - deductability

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Donating Protected puts - deductability

Post by ipo_fin_z » Tue Jul 31, 2018 2:04 pm

I hold:
  • long-term held stock with high cap gains
  • put option on said stock that will be short-term at expiry with high cap gains
If I exercise the long-term held stock with the put option, effectively the put options gains are treated as long-term cap gains. (pub 550).
If I sell the stock and put option, stock is long-term and put is short-term. (also pub 550)

However, if I donate the stock and put option together and my donor advised fund exercises the stock with the put, am I allowed to treat the deduction as though the put was long-term? (i.e. deduct the put strike price on schedule A) -- or can I only deduct FMV of stock and the basis of the put (treating stock as long-term and put as short term)?

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