All sales must be reported to the IRS by form 1099. When a short position is still open into the next tax year the tax payer must report the sale on a schedule D and report the buy basis as still open. Therefore it is not taxable. If geithner_ti knew how to report this correctly then he would know that H&R Block Financial Advisors reported all correct. My suggestion, if amateur investors are going to try more sophisticated trading strategies then take those tax issues to professionals to prepare.