Even though you do not own any stock of the Ace Corporation, you contract to sell 100 shares of it, which you borrow from your broker. After 13 months, when the price of the stock has risen, you buy 100 shares of Ace Corporation stock and immediately deliver them to your broker to close out the short sale. Your loss is a short-term capital loss because your holding period for the delivered property is less than 1 day.
looks like I may have been wrong according to this post by WithCatz. What do you think about this Rumble?
"Thought folks might want to chew on this IRS publication for a bit.
I know I now think I was wrong on my "assumption" (and readings here) that if you shorted a stock, and didn't close for 366 days, then when closed, it was long-term.
Even though you do not own any stock of the Ace Corporation, you contract to sell 100 shares of it, which you borrow from your broker. After 13 months, when the price of the stock has risen, you buy 100 shares of Ace Corporation stock and immediately deliver them to your broker to close out the short sale. Your loss is a short-term capital loss because your holding period for the delivered property is less than 1 day. "
So, without any other exotic stuff going on -- to simply have shorted WAMU and later buy it back to close your short position, there is no favorable tax treatment whether it's 1, 10, 365, 366 or whatever number of days you had the short position.
It's all about the fact that you only held the TRUE stock for a day at best when you bought and delivered it back to where you borrowed it.
This leads to the "short sales are always taxed at short-term capital gains" comments... and appear to be true in all 'normal' circumstances.
Market Data 
Markets 
AI
