Holding Long & Short Positions Simultaneously?

[NoBias]

Quote from Froglet:

then talk to a REAL CPA!

The operative term... 100% agreement.

I have a 4 step process at tax time

#1, Reconcile my trade records with Tradelog
#2, Send reconciled trade records to accountant along with 1098's, 1099's, 1256's, etc...
#3, Sign the efile authorization form 8879 provided by him
#4, Relax



Investopedia Link to Short sell against the Box http://www.investopedia.com/terms/s/sellagainstthebox.asp#axzz20FVcDEiJ

 

[deucy28]

Quote from Froglet:


If you're talking about the same stock, I believe it's called, 'shorting against the box'.

.....I honestly believe, you should just worry about how to make money, than to worry about booking your losses.... [/B]

Three points here:

1. Booking losses is an extremely important event to offset gains and reduce tax liability. Reporting it on tax returns correctly is equally important.

2. In an environment where trades have me or anyone who is successfully and nicely net positive from year to year, point 1 above which is about the importance of booking losses and reporting it correctly is exceptionally important, especially as explained in point 3 below.

3. For clarification, "pairs trading" which is my gig, is specifically described here in my style of trading: My "trade" is one stock Long and a different one Short. The "trade" is all about the relationship between the two with respect to developing a gain or a loss in the "trade." For IRS reporting purposes, a trade is that Long leg. For IRS purposes, a trade is also that Short leg. Almost all MY "trades" (again, meaning two legs) generate one leg as being a loss and the other leg being a gain. Of course the object is to have the gain leg exceed the loss leg. If I put on 100 of MY "trades" each year, I will have roughly 100 losses and 100 gains from the IRS's perspective. One can't be cavalier about being sloppy reporting those IRS losses, all 100 of them.


I'm sure there is an accountant is in my intermediate future. When life's distractions finally wind down as I am purposely making happen, there will be a whole lot of personal trading going on. It is important to get these IRS and SEC knowledge points lined up to be able to speak intelligently to hired professionals.

Thank you NoBias and others for YOUR contributions !

 

[TickSlicer]

Going in 2 different directions in 2 different trading accounts will give you the same end result which is "Nothing" plus extra commissions paid. Because at some point, you still have to pick one direction which brings you back to square one. So either way, you need to have a winning directional strategy because there are no short-cuts in life. But don't take my word for it. Give your strategy a shot and let me know how it goes...