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Financial Planning / Tax Strategies


Subject:  "Intent" on constructive sale Date:  11/8/1999  11:07 PM
Author:  CarlErikson Number:  20738 of 123001


This question is similar to one I previously posted, but maybe it is a little more clear:

Suppose I hold 100 shares of MSFT long and have owned the shares since 1995. Now, because I am an unfoolish active trader, I decide to short 700 shares of MSFT for trading purposes, and not to do a "short sale against the box." I cover these 700 shares of MSFT a few days later (within the '99 tax year). Does the fact that the number of shares differ in these transactions (100 vs. 700) make any difference in terms of whether there was a "constructive sale" due to the first 100 shorted shares of the transaction? I.e., can I prove that my intent was to short-term trade these 700 shares and not touch my long-term holdings in the process?

Also, suppose the 100 shares of MSFT was at an account at Schwab but that I shorted the 700 shares using a different acount