David, After it becomes disallowed, you would simply have to pay tax the next year. There is really no such thing as tax elimination, just tax deferment.
When you short 100 shares of a $50 stock, $5000 less commissions is paid into your account by the person who buys the shares, just as it is done in a normal sale. That cash obviously draw interest somewhere and it is paid to someone. Usually, a modest amount is paid to the brokerage or bank that lends the shares and your broker should get a modest amount for setting up the trade. However, anywhere from 70 pct. to 95 pct. (what Soros and the Bass Brothers get) should be yours. Since most brokerage firms do not pay it to retail customers, they are simply stealing it for their own profits. I have even heard brokers feign absolute ignorance about the rebate, and in some case they actually are ignorant. I even heard one guy say that such an arrangement would be against the law. -g- But, without a rebate, you are giving up a lot to pro short sellers.
Since brokers are members of the ass family, donkey pictures won't work. -g- MB |
