Income Taxes and Record Keeping ( tax ) Message Board

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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )

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To: Colin Cody who wrote (1784)	1/31/1999 6:17:00 PM
From: Box-By-The-Riviera™	Read Replies (1) of 5810

Anyone familiar with Section 263 (h) of the code????? It says a deduction for certain payments in lieu of dividends in connection with short sales is allowed.....but they are not allowed if the short sale is held open for less than 46 days..... but a deduction for payments is allowed to the estent that ordinary income from amounts paid by the leding broker for the use of collateral exceeds the "dividend" payments.... any amount disallowed is to be added to the basis of the stock..... My question is the following...... if deductions are not allowed for dividends I had to pay while holding short positions on positions that were held less than 46 days..... does this mean those same payments can be added to the basis of my costs..... in which case they become deductable by offsetting my capital gains??????????????????????? secondly.....if i then add this to my basis (assuming I am allowed to do this) and attatch a note to my return showing why my stock sales are greater than those reported on my 1099.....will this throw me into the red flag area for an audit?????? many thanks in advance for any help....

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