Add training workflow, datasets, and runbook

training_data/curated/text/91e80999fd508da6d7e52c9ee27b2fb5b8952766b466ee8497a612fefe6e2361.txt

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+Chapter 41: Taxes 909 
+more than 6 months, which was the required holding period for a long-term gain at 
+that time), and the short side of the spread could be ordinary loss. Of course, the 
+stock would have had to move in the desired direction in order to obtain this result. 
+In 1976, the tax laws changed. The major changes affecting option traders were 
+that the long-term holding period was extended to one year and also that gains or 
+losses from writing options were considered to be capital gains. The extension of the 
+long-term period essentially removed all possibilities of listed option holders ever 
+obtaining a long-term gain, because the listed option market's longest-term options 
+had only 9 months of life. 
+All through this period there were a wide array of tax strategies that were avail­
+able, legally, to allow investors to defer capital gains from one year to the next, there­
+by avoiding payment of taxes. Essentially, one would enter into a spread involving 
+deep in-the-money options that would expire in the next calendar year. Perhaps the 
+spread would be established during October, using January options. Then one would 
+wait for the underlying stock to move. Once a move had taken place, the spread 
+would have a profit on one side and a loss on the other. The loss would be realized 
+by rolling the losing option into another deep in-the-money option. The realized loss 
+could thus be claimed on that year's taxes. The remaining spread - now an unrealized 
+profit - would be left in place until expiration, in the next calendar year. At that time, 
+the spread would be removed and the gain would be realized. Thus, the gain was 
+moved from one year to the next. Then, later in that year, the gain would again be 
+rolled to the next calendar year, and so on. 
+These practices were effectively stopped by the new tax ruling issued in 1984. 
+Two sweeping changes were made. First, the new rules stated that, in any spread 
+position involving offsetting options - as the two deep in-the-money options in the 
+previous example - the losses can be taken only to the extent that they exceed the 
+unrealized gain on the other side of the spread. (The tax literature insists on calling 
+these positions "straddles" after the old commodity term, but for options purposes 
+they are really spreads or covered writes.) As a by-product of this rule, the holding 
+period of stock can be terminated or eliminated by writing options that are too deeply 
+in-the-money. Second, the new rules required that all positions in nonequity options 
+and all futures be marked to market at the end of the tax year, and that taxes be paid 
+on realized and unrealized gains alike. The tax rate for nonequity options was low­
+ered from that of equity options. Then, in 1986, the long-term and short-term capi­
+tal gains rates were made equal to the lowest ordinary rate. All of these points will be 
+covered in detail.