[[I put on a short position in 1996 and covered it in 1997. It was listed as a sale on my 1099 for 1996. How are these trades handled for taxes? thanks, chris]]Since the transaction was closed in 1997, it is required to be reported on your 1997 return. And any gain/loss is reported in 1997.I assume that when you reported the "sale" in 1996, you simply reported the "sale" on Schedule D as an "open" short position. No gain or loss should have been reported in 1996 since you didn't have a "closed" transaction then. If you actually reported the sale in 1996, and paid tax on any of the proceeds, you need to go back and amend your 1996 tax return.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)TMF TaxesRoy
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