Ask your broker for a "worthless" letter. That will basically be the confirmation of your buy to cover at $0.00. Some brokers have an internal worthless securities account where, as a service, they will transact the buy to cover for you at a net trade amount of $0.0001 or thereabouts. Good luck, MOB
You always report your short even before you buy it back. According to the tax rule, Suppose you shorted a stock at $10 last year and didn't cover it in the same year, you report a gain of $10. At the year that you cover it, you report it as a loss.
Think quite a few traders had this happen with refco, remember seeing similar questions, do some searching and you'll probably find it
Yeah, I thought about that later. 1099 from broker reports sales. It's up to the trader to report what the basis is (non-MTM trader status), even though you "sold" it before you "bought" it. Tax software used to hate that. They never heard of short selling...
It is not up to a non-MTM trader to decide the basis. The law requires you to use a "zero" basis for your short if you haven't covered it. Your broker doesn't report your purchasing price. It doesn't mean you can choose the basis.
Hmmm. Thnks. That kinda sux. Looks like tax hassles with long-term shorts are even worse than long trades...