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What are some important tax implications to take into account if you want to be a short-only trader? Also does the type of security you short matter?
I'm interested in being a short-only trader. Can you tell me some of the important tax implications I should be aware of?
Sure, shorting stocks can have different tax implications compared to buying stocks. When you short a stock, you essentially borrow the shares and sell them with the hope of buying them back at a lower price. However, if the stock price goes up instead, you'll have to buy the shares back at a higher price, which may result in a capital gain. The tax implications of this capital gain will depend on a few factors, including the length of time you held the position and your tax bracket. It's always best to consult with a tax professional for specific advice.