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No. of Recommendations: 1
<<I own a few thousand shares of a $20 stock that I've had so long that my cost base is almost nothing.>>

Congrats to you!!!

<< I have been tracking this stock for many years and it fluctuates a couple dollars around 20. I just want to short 1,000 shares when it gets high and cover when it goes low again. I have read all the Fool.com stuff on Constructive Sales and have gotten IRS Pub 550 and I still don't get it.>>

Then I don't know what to tell you. I tried to be as simple and direct in my explanation of the constructive sale rules as I possibly could. If they still don't make sense, then you'll likely be required to take your questions and issues to a qualified tax pro who can explain them to you in greater detail...using real live examples that might apply to you.

<<Can I short 1,000, wait 60 days, and cover?>>

Yup...as long as you don't violate the constructive sale rules.

<< I'll avoid year-ends and I plan to have the underlaying stock forever.>>

Then...if you are going to avoid year end transactions, and you are planning on holding the underlying shares "forever", it's likely that you'll avoid the constructive sale rules. But you really better have a FIRM handle on how the rules work before you beging shorting appreciated financial positions.

TMF Taxes
Roy

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