Investor owns 1,000,000 shares of stock of Corp. XYZ with a zero basis and a FMV of
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Investor owns 1,000,000 shares of stock of Corp. XYZ with a zero basis and a FMV of 100,000,000 that the investor has held for 20 years. The investor sells 1,000,000 shares of XYZ short for $100,000,000 in February 2018. On January 21, 2019, the investor purchases 1,000,000 shares with a normal settlement for 120,000,000 and instructs the broker to deliver those shares to close the short sale. XYZ paid 4 dividends during 2018. The ex-dividend dates were March 1, June 1, September 1, and December 1. The total amounts of the dividends were $5,000,000. The investor did not borrow any money with respect to the transaction and because interest rates were so low did not receive any rebate on the short sale proceeds. What are the tax consequences in 2018 and 2019?
Related Book For
Federal Taxation 2017 Individuals
ISBN: 9780134420868
30th Edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
Posted Date: