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If you short a stock in 97 and cover it in 98, what if any tax consequences do you incur in 97?
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<<If you short a stock in 97 and cover it in 98, what if any tax consequences do you incur in 97? >>

If you are talking about a straight short (and not a "short against the box" or other hedging transaction), your tax issues will show up in 1998 when the short is covered. You would generally have no tax consequences in 1997 directly related to the short position.

But if you have to pay dividends on your short position, check out the Taxes Frequently Asked Questions area for how to handle that issue.

And if you are involved in a hedging transaction (or what is currently known as a "constructive sale") the laws have changed significantly due to the passage of TRA '97. So make sure that you are aware of the changes.

TMF Taxes
Roy
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