[[Help. I shorted a stock early in 97 and have been sitting on it ever since. The money that was put into my account is now counted as income. If it were a stock that I sold after having bought it, I would only pay taxes on the capital gains, but since I still haven't bought this one, how do I account for it? Do I have to pay taxes on the entire amount that I shorted it for? Somebody please help?]]Don't fret. Since your "short" was an open position at the end of 1997, you do not have a tax event...even though your broker reported this "sale" to you on your Form 1099B.On the Schedule D, in the description column, write "XYZ Shares Open Short". In the date purchased column, write N/A. In the date sold column, use the date that the "short" was originally sold. In the sales price column, use the net amount reported to you by your broker. In the cost column, write N/A. In the gain or loss column, write "open short". That will allow you to reconcile your Schedule D with your broker 1099, and have no tax issues regarding the open short position. When you finally cover the short position is when you'll have to pay the Uncle Sammy piper.For additional information on short sales, see IRS Publication 550.TMF TaxesRoySPECIAL NOTE: I try to answer as many questions as I can each week, and I generally select those that have not been asked before. If you don't get a detailed answer to your question, it is probably because my time is so limited during tax season, or because it has already been asked and answered in this folder in the past, or because it has been discussed in the Taxes Frequently Asked Questions area. In order to visit the Taxes FAQ area, go to the Fool's School area (http://www.fool.com/school.htm) and check out "Other Features" in the list box, OR you can jump directly to the Taxes FAQ area (http://www.fool.com/school/taxes/taxes.htm). Additionally, if any references were made to the IRS Web Site, you can get there by pointing your web browser to (http://www.irs.ustreas.gov)
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