Does anybody know how one can organize a short sale on Schedule D? I understand that if the short and any cover were made in the same tax year, the net capital gain is treated like any other capital gain. What if You shorted a stock in one tax year and did not cover the short for say 2 years. How is this dealt with? Also what if after say 2 Years You decide that your short was not a good idea, and cover the position with a loss. To make it more interesting lets say the loss is $10,000 (beyond the $3000 limit). I find the explanations in the IRS publications quite ambiguous in this area. Any help appreciated.
Thanks
John