Which of the following is correct concerning short sales of stock at the time the short sale is made?
A)The taxpayer does not deliver to the purchaser the shares sold short.
B)The taxpayer delivers to the purchaser the shares sold short.
C)The taxpayer may already own the shares sold short.
D)The taxpayer always already owns the shares sold short.
E)None of these.

Question

Quizplus · Accepted Answer

When a taxpayer makes a short sale of stock, he/she must deliver the shares sold short to the purchaser. Therefore, option B is correct. Option A is incorrect because if the taxpayer does not deliver the shares sold short, it would result in a failed delivery and the taxpayer would incur penalties. Option C is sometimes true, but it is not necessary for the taxpayer to own the shares sold short. Option D is incorrect because it is not always the case that the taxpayer already owns the shares sold short. Option E is not correct as there is a correct choice.

Which of the Following Is Correct Concerning Short Sales of Stock