Shorting stocks: High fliers Message Board

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Strategies & Market Trends : Shorting stocks: High fliers

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To: Q. who wrote (622)	1/5/1999 3:57:00 PM
From: Anaxagoras	Read Replies (3) of 709

In what year do you report your gain/loss when you cover a short sale? I have an old hard copy of a post TMF Taxes did last year on a somewhat related topic. It does not address your question directly, and I would like to hear others take on it as well. But since the old post I mentioned might be useful for others, I'll summarize. TMF Taxes notes that there is not a taxable event until a short position is covered. So for those stocks you sold in '98 but did not cover, on your schedule D for '98 you simply fill out the description of the shares, including the word 'short'. In the "date purchased" spot you can write "N/A", and in "date sold" you use the sold date. In the sales price you write your net sales price, i.e. the amount you get reported to you on your 1099B. In the cost/basis column you write "Open Short". Now based on the fact that you don't have a taxable event till you cover (although you still report it if it crosses into a new year), once you do cover you have a taxable event, and so it should be reported in the year it closes. That's my take. Anaxagoras (who is anything but an expert and does his own taxes with the greatest of fear, trepidation, and uncertainty)

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