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I have shorted stock in a company which may go bankrupt. If that should occur, I have heard that you never need to cover your short position. In that case when would you need to report your gain for tax purposes?

BTW, I saw that Iridium was started on the NASDAQ for a short period (maybe just 1 day) after being halted for a long time. As I recall, shorts were covering at aroung $2. Why would they do that if the stock was worthless?

Thanks in advance.
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