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Which as a capital loss on the year one income tax return

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Problem 1: On February 1, Year 1, a taxpayer purchased an option to buy 1,000 shares of XYZ Co. for $200 per share. The taxpayer purchased the option for $50,000, which was to remain in effect for 6 months. The market declined, and the taxpayer let the option lapse on August 1, Year 1. The taxpayer would report which of the following as a capital loss on the Year 1 income tax return?

Option 1: $50,000 long term.
Option 2: $150,000 long term.
Option 3: $50,000 short term.
Option 4: $200,000 short term.

Reference no: EM132843509

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