An investor owns 500 shares of stock that have been held for five years with a basis of $20,000. The investor also owns 500 shares that have been held for three months with a basis of $40,000. The investor sells short 500 shares of stock for $27,500.

If the investor closes the short sale by delivering the shares held for five years, what is the amount of the gain/loss? 

Is it long term or short term? Why? What would happen if the investor delivered the shares held for three months?

Answer rating: 100% (QA)

If the investor closes the short sale by delivering the shares held ... View the full answer