Managing Concentrated Single-Asset - Tax

[FrankCFA]

Many tools are able to manage concentrated single asset.
Apart from outright sale, any methods will result in tax unfriendly (will be taxed immediately)?

 

[Galli]

selling a front month call ITM
buying a front month put ITM

 

[FrankCFA]

Galli wrote:
selling a front month call ITM
buying a front month put ITM

Thanks. Will tax authority smart enough to pick that up?

 

[Galli]

yes because your position will be exercised (sold)

 

[FrankCFA]

Thanks, but ITM option is not the way to manage concentrated position? (at least not in CFA L3)

 

[jmsp]

I think recapitalization also results in immediate taxation to the portion sold.

 

[FrankCFA]

Thanks! Yes, recapitalization should result in taxation…they are staged exit strategy.
Seems will need to pay tax at the first stage.

 

[Galli]

You asked with strategies would cause a taxable event, I gave you two.

 

[FrankCFA]

Thanks.
Add one point, sale and lease back(property) will also trigger tax issue.