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A. An investor enters into a futures contract covering 100 ozs. of gold. At the time...

A. An investor enters into a futures contract covering 100 ozs. of gold. At the time the underlying price of gold is $1,525 per ounce. At the end of the year the investor is still holding the contract and the underlying price of gold under the contract is $1,450 per ounce. On March 1, of the following year, the investor takes delivery of 100 ozs. of gold under the contract when the price of gold is $1,400 per ounce. What amounts of gain/loss must the investor realize with respect to this transaction? What is the investor’s basis in the gold?

B. An individual investor has net Sec. 1256 losses of $400,000 in 2018. The individual also has $100,000 of other long-term capital gains.

In 2014, the individual had $1,000,000 of Sec. 1256 gains and $300,000 of other long-term capital gains from selling physical gold. In 2015, the individual has no capital gains or losses. In 2016, the individual had $150,000 of Sec. 1256 gains and other long – term capital gains of $85,000. In 2017, the individual had $200,000 of long-term capital losses from the sale of stock.

How much of the loss was the individual able to carry back? How much of the loss carry forward, if any, is treated as short term and how much is long term?

C. An individual enters into an option to buy 1,000,000 Euro’s at $1.2 per Euro. The option will expire in February 2019. The taxpayer acquired the option from the taxpayer’s investment banker and the option was not traded on an exchange. At the end of 2018, there was $300,000 or unrealized gain in the options contract. How much gain did he taxpayer have to recognize in 2018 and what was the character of the gain? Why?

D. Two individuals think that the stock market will increase in value. Either they can buy options on the S&P 500 Index or they can buy options on an S&P 500 mutual fund. If they think, they will be getting out of their investment in six months, which option should they buy? Why? If they think, they will stay in the position for more than one year, which option should they buy? Why?

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