Cal-Bay International Inc (CBYI)

[Russ49]

You have to look at your own tax situation and try to predict what the gains will be to determine your tax exposure. Use the IRS tax tables. Also, consult the publication that explains capital gains. Another thing to consider are your past losses carried forward. You can use those to offset your tax on the gain of this or other stocks. But, back to your question. If you sell some shares to cover your position you have a neutral trade. In other words, it's like you never did it. When you sell the remaining shares that you now have for free, you will have a gain which will be taxed if you have no offsetting losses. You can decide in the future when you want to sell all or part of that position to limit your tax exposure. I hope that helped. In any case, I believe long term capital gains are taxed at 15% thanks to Bush. Under Clinton, they were taxed 20%. Short term capital gains are taxed higher. Capital gains are separate from your other income which you may or may not itemize.