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Strategies & Market Trends : SHorting Stocks: Education/strategies/techniques
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To: Early Bird who wrote ()4/27/1997 6:37:00 PM
From: Dave Budde   of 99
 
Anyone care to discuss the virtues (or lack thereof) of selling short against the box. Seems like there are two good reasons to do this.

1. You hold a position in a stock that has appreciated considerably and wish to make use of the cash. By selling it short against the box, you get the cash, but pay no tax until you close the position. The cost of this is the interest on the cash that you get until you close the short position. I suppose you could leave this short position open indefinitely if the return on the proceeds less the the interest is less costly than the tax.

Hmmm...what are the tax effects on death if you have a short position open like this. Gets kinda complicated I suppose.

2. You're long a stock that has appreciated and you wish to sell but defer the gain until the following tax year. Sell short now and cover after the first of the year.

Any other reasons to do this?
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