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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Richard Nehrboss who wrote (34814)1/11/1999 3:30:00 PM
From: Redman  Read Replies (2) of 95453
 
You are exactly right. Because you have to cover your short with newly bought shares, nothing happens to your time basis in the "original" shares, but you would have to hold the original shares for the four month holding period after the short is covered. Again, short against the box would only work for what you are talking about, nervousness in the market temporarily----But wanting to hold onto the shares for the long haul. If you are willing to keep your long position for four months after the short is covered, then this strategy will work for you. It won't work to protect gains or defer, because (1) the time clock stops on the "original" shares when the short is put into place, and (2) you will have to hold a net long position on the "original" shares for four months after you cover--thereby still assuming market risk. Pretty clever of the IRS.

Again, check with your accountant before you do anything.

Red
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