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Which of the following BEST describes tax treatment of a long option that expires without exercise?

A. It is a wash sale.

B.
It results in a capital loss of the premium.

C. It results in a capital gain of the premium.

D.There is no transaction, so there is no tax implication.





Answer: B

Taking a long position on an option - that is, buying it - incurs a premium; not exercising the option means losing that money.

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