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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )
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To: mel221 who wrote (3853)6/25/2001 11:14:36 PM
From: Colin Cody  Read Replies (2) of 5810
 
Mike, Sorry I was originally thinking about day trading long positions. I see you're actually concerned about short positions.

Well as you know, Clinton pushed through his short selling ideas and after compromise - if you were short against the box on December 31st and the position remained open until January 31st, then you have "sold" the original stock.

This is not really (IMO) in conflict with a mark-to-market election since investments should/(soon to be must) be held in a separate brokerage account, one not linked or available for shorting against the box via a trading account.

One could still argue that a naked short sale should be considered the sale of the long-term long position, but I think the M2M rules would prevail and a trader's short would not be considered a sale of an investment. Of course the IRS might force you to go to Tax Court to prevail in that position!!

If you were NOT a M2M trader then the distinction gets blurry, and one could spend many hours arguing either side of the issue I'd suppose.

Perhaps, if these are material transactions for you, it would be best to not hold any short positions in the first two or three months of the year - and then you can continue to hold your long-term long position for many years to come!
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