Short sale against the box

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RoccoLee

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When using short sale against the box to deal with the concerntrated position, will the investor still have the dividends from the concerntrated position? Or the dividends will pass through to the lender of the stocks shorted?
 
Until the short sale is open I’d say the short seller has to pay dividends to the lender.
 
It means that if dividends are NOT available at the party who did short selling.
 
But you do get the dividends on the stock you own.
The net effect is that you get the dividends on the net stock position: what you own less what you sold short.
 
Not sure how in depth the material gets but you pay divs on the short, receive divs minus tax witholding on the long. In real life you will sometimes also have to make up the tax for the short stock lender if they are div sensitive and pay a grossed up dividend (countries with div imputation)
 
verse214 wrote:
Not sure how in depth the material gets but you pay divs on the short, receive divs minus tax witholding on the long. In real life you will sometimes also have to make up the tax for the short stock lender if they are div sensitive and pay a grossed up dividend (countries with div imputation)
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nice catch.
can the concentrated position be put into a tax free account?
 
Hi Verse214 the reason of this in-depth review it’s because I come across a question that says “you, in quality of short seller, can offset borrowing costs with the dividends”…the answer was a NO because you have to transfer them to the lender and allow me to say that it makes sense cause you technically sold them, you pay interests and you should not get any monetary right (i.e. dividends) out of the assets you sold.
Hope it helps,
 
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