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2. Suppose I hold 50 shares of ABC in Account A and 50 shares in Account B. I sell 50 shares in Account B, and then another 50, such that Account be is short 50 shares. Net, I hold 0 shares, but one account has +50 and another has -50. Did that second sale count as a short sale, or do I act as if I am net 0?

Account B had 50 shares, you sold them. So you have no shares. You then sell another 50 shares, you have a Short sale. That short transaction remains until you cover that position. The fact that you have an identical number of shares elsewhere doesn't matter, unless you transfer the shares from account A to cover the short


It depends. If the shares in Account A were showing a profit when the short sale was entered in Account B, then you would have a deemed sale of the shares in Account A and tax would be due. If the shares in Account A were showing a loss when the short sale was entered in Account B, you would maintain the offseting positions as independent holdings. This is all explained in IRS Pub. 550, Investment Income and Expenses, www.irs.gov/pub/irs-pdf/p550.pdf, pg. 40.

Ira
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