1. If I've realized $100 in gains of EGRP options, but have over $3000 in unrealized losses of EGRP options, and I sell to realize, will I be able to deduct the maximum $3000, even though I only offset $100 in gains?
2. Should I sell, I would probably lose only $2000 gaining the $1000 back in tax if item 1 is possible. If I were to hold and they expire next year, I would have to recoup the full $3000 to be even. Does it make sense to hold?
I don't believe, that's the correct answer. As per tax laws, the trade-date is the date to be used for calculation of LT/ST gain or Loss and you DON'T have the option of using either Trade-date or Settlement-date.
1. The tax effect of capital gains and losses are base on NET REALIZED GAINS AND LOSSES for the entire year - combining all realized capital gain transactions against all realized capital loss transactions.
2. If a taxpayer has a net realized capital loss for the tax year, the taxpayer is allowed an annual capital loss deduction of $3,000 against ORDINARY INCOME (i.e. wages, interest income, dividend, etc.). Any losses exceeding $3,000 are carried forward to the following tax years indifinitely.
3. The current tax savings for realizing unrealized losses are base on whether the taxpayer have gains to offset the losses and if whether the net losses have exceeded $3,000 annual deduction allowed. The amount of tax savings are base of the taxpayers MARGINAL TAX RATE.
4. If an option expires and becomes worthless, the full amount paid for the option is considered as Capital Losses and are treated as any capital losses.
Remember, Investing is not for the purpose of realizing capital losses. Good Luck.