[{"data":1,"prerenderedAt":7},["ShallowReactive",2],{"faq-standard-2131":3},{"rec_id":4,"title":5,"text":6},"2131","How do I report a short sale of stock on my Schedule D?","A short sale is when you sell stock borrowed from a broker or other lender then replace the borrowed stock by buying identical stock at a later date and delivering that stock to the lender. The explanation below is for the most common scenario where you do not own any of the stock before or after you do the short sale. You just borrow the stock to do the short sale, then at a future date you buy replacement stock to immediately give back to the lender. If you owned the same type of stock before or after you did the short sale, the rules are a lot more complicated and you need to ask a tax professional or research your situation in a tax advice book. \r\n\u003Cbr>\u003Cbr>\r\nUsually, you report the short sale on your tax return in the year you deliver the replacement stock. So the date sold is the date that you deliver to the lender the stock to cover the short sale. The date acquired is the date you purchased the stock delivered to the lender. \r\n\u003Cbr>\u003Cbr>\r\nFor example, if you did a short sale of 100 shares of XYZ company on May 1st, then bought 100 shares of XYZ replacement stock on August 1st and delivered the 100 shares of XYZ replacement stock on the same day August 1st, then your date acquired would be August 1st and the date sold would be August 1st.\r\n\u003Cbr>\u003Cbr>\r\nIf you have an open short sale where the short sale happens in one year and then the replacement stock is delivered the next year, you may want to report the open short sale as a no gain stock sale in the first year, then report it again as the real stock sale the next year. That way your stock sale proceeds in the first year will match what the IRS receives from the year end tax statement received from the broker. This would prevent a possible letter from the IRS asking why your sales proceeds reported on your tax return are less than the sales proceeds reported on your broker's year end statement.\r\n\u003Cbr>\u003Cbr>\r\nFor example, you do a short sale of 200 shares of ABC corporation for $10,000 on November 1, 2024, then purchase and deliver 200 shares of ABC corporation stock for $9,000 as replacement stock to your broker on February 1, 2025. You may want to report the 200 share short sale on your 2024 tax return to report the $10,000 sales proceeds which will probably be on your broker's year end statement sent to the IRS. You would enter $10,000 as the sales price and $10,000 as the cost basis so there would be a zero gain on your 2024 tax return. You would report the date acquired as November 1st, 2024 and the date sold as November 1st, 2024. Then when the real short sale happens on February 1, 2025, you would report the short sale like normal on your 2025 tax return, reporting $10,000 as the sales price and $9,000 as the cost basis with a short-term capital gain of $1,000. The date acquired and date sold on your 2025 tax return would be February 1, 2025.",1777391501796]