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Hi all,

I had heard that it is possible to claim the dividends paid in lieu when holding the SPY ETF short. (or any dividend paying position shorted).

I can only find where margin interest is claimed. I'm using TurboTax.

If it has to be claimed as a misc investing cost, it has the 2% cap, which does me no good.

If you can claim these dividends, where do you do it?

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How you deal with payments you make in lieu of dividends is discussed on page 58 of IRS Pub. 550, Investment Income and Expenses, Whether they are deductible itemized expenses or adjustments to cost basis is determined generally by the length of time the short position is open.

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Thanks Ira,

I read that section but I got confused by investment interest, not subject to 2% and that with no limitation.

I held the shorts as hedges over a year. I'll go back and find where to enter the payments in TurboTax.


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