How do you enter this trade in your tax?

Discussion in 'Taxes and Accounting' started by hajimow, Dec 28, 2012.

  1. I have had multiple of similar cases during my trading years and I have entered the trades in a way that I believe is the right way. However I would like to know how you guys treat this in your tax return. I will tell you how I enter my trade in my tax a little bit later not to bias your mind. The case is:

    You short 100 shares of a stock for $100 per share and while you are short the stock goes ex-dividend for $2 per share. Then you buy back the stock at $95. What is your profit here in your schedule D? Do you enter you sold at $9800 and bought back at $9500 with $3000 profit without mentioning the dividend?
    Do you enter you sold at $10000 and bought at $9700 with $3000 profit.
    Or do you enter that you sold $10000 and covered at $9500 with $5000 profit and add that $2000 dividend as your other cost of investment or do you go ahead and subtrcat that dividend your paid from dividend that you have received from your other investments?

    I know that your answer might not be right right way and you might advise me to consult with a tax expert but I beileve this is a good tax-trading topic.
  2. sprstpd


  3. sprstpd