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I had this circumstance presented to me & I believe I know the right answer; BUT, I also have a little bell ringing that says be careful.

Bob has $20k of capital gains already stacked up (s/t vs. l/t not relevant) in account A at full-service brokerage A.

Bob also has, as yet, unsold securities in account A which when sold will create a loss of $20k.

Bob opens a new brokerage account B at discount brokerage B & requests that the unsold securities at A be transferred to B "in kind".

Come, 12/25/01, brokerage A has still not complied with the transfer.

On 12/26/01, Bob sells short the same, as yet undelivered, securities in account B at brokerage B.

On 1/5/02, A finally complies & transfers the securities to B & Bob calls brokerage B and requests that that the securities just delivered be used to close the open short positions.

What is Bob's capital gain for 2001? I think it is zero. However, I also have that little bell ringing.


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