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Taxpayer purchases 100 shares of XYZ Corp on February 1, 20x1 for $100. Taxpayer sells short 100 shares of XYZ Corp on June 1, 20x1
Taxpayer purchases 100 shares of XYZ Corp on February 1, 20x1 for $100.
Taxpayer sells short 100 shares of XYZ Corp on June 1, 20x1 for $110.
Taxpayer closes the short position on July 1, 20x1, buying 100 shares of XYZ Corp for $90.
Taxpayer sells the original position on February 2, 20x2 for $120.
What is the amount and character to recognize in 20x2?
a.$20 Long-term capital gain
b.$20 Short-term capital gain
c.$10 Short-term capital gain
d.$10 Long-term capital gain
Can you please explain.
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