Forward Conversion with Options

2014 AM Mock, problem 2d.

A forward conversion w/ options relies upon the creation of a synthetic short.

I have never understood why the CFAI thinks this structure would not be considered a constructive sale, which to my knowledge is a taxable event. Can somebody clarify?

The problem states a desire to avoid realizing capital gains taxes.


I think many of the strategies may potentially be considered as constructive sale, depdning on the rule of the region/country.

Guess what we really need to care about in the exam is just to answer what they want and not addting anything beyond the question crying

same for short sale against the box. It’s been taxable in the US since last century… But it says tax free in the curriculum…

Fair point, I was being US-centric in my assessment.