FAQs: Short Sale

1. How do I value a short sale in Schedule C, Part I?

Open Position: You may use the cost of repurchasing replacement securities or you may use the cost of the securities that you originally borrowed.

Closed Position: Use the cost of repurchasing the replacement securities. Do not use the cost of the securities that you originally borrowed from the broker.

2. What if I shorted the same stock on multiple occasions during the reporting period?

Schedule A: For multiple completed short sales of the same asset, aggregate the income from those transactions and report the income as one line entry in the report.

Schedule C, Part I: If you completed multiple short sales and/or currently hold open short positions in the same security with the same broker, aggregate the liabilities owed to that broker and report liabilities as one line entry in the report. However, if you used different brokerages for multiple short sales of the same security, report your short sale liabilities for each broker as separate line entries.

3. If I have an open short position, should I report anything in Schedule A?

No. When you are in an “open position,” the value of the securities is not reportable in Schedule A because the securities do not belong to you and they have not yet generated any income.

 

This guide is not intended to provide investment advice, and you should not rely on statements in this guide when making investment decisions.

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