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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: Zeev Hed who wrote (98367)8/9/2002 10:59:01 PM
From: Cy B  Read Replies (1) of 99280
 
It is correct that you cannot have a long term gain for a short position held more than a year because all short sales are treated as short term no matter how long held.

However the statement about "mark to market at the end of the year" is incorrect. This is not required by IRS. Any short position carried over on Dec. 31, remains a non taxable event until the short position is closed or until the stock becomes worthless. It is only taxable in the year the position is closed or becomes worthless. A good reference for this is in the IRS publication below; page down to last comment where it also details how to report an open short position to make your tax documents consistent:
irs.gov

A "short against the box" is also not "marked to market" at the end of the year. It is considered a "Constructive Sale" at the time the short position is taken and is reported as such.
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