Re: short sale again the box -- Since Jbog didn't reply, I thought I would stick my beak in. Jbog was offering an explanation of why the short position is not something Mulfaso should worry about, i.e., it is not necessarily motivated by a bearish view but by a desire to get long term capital gains. Presumably, then, he was referring to actual short selling, not synthetic (although I suppose that synthetic short selling may effectively cause actual short selling by market makers taking the other side hedging their synthetic position).
I don't follow his reasoning for two reasons: (i) since 1997, a short against the box triggers gain in a long position, gain on an "appreciated financial position" is recognized under the "constructive sale" rules of Code Section 1259 to the extent you enter into a short sale; and (ii) just because the stock price increased in February 2024 doesn't mean that an investor's holding period is short term as of December 31, 2024 (as Jbog suggested), holding period is measured from date of purchase, not date of price increase. Thus an investor buying in December 2023 or earlier would be long term as of year end 2024. And of course, gain is not triggered unless you sell, unless you are a hedge fund or another person electing mark-to-mark treatment.
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