From Dorothy Mallonee, gloating: “I almost hate to tell you this, but based in part on your prior experience with short sales, but more on my expectation that the market dip on September was very temporary; and firmly against the advice of both my husband and my broker, I bought 200 shares of Amazon.com on 15 September at 71 9/16. Today it closed at 218. I’m trying to figure out if I can take my original investment amount out without paying capital gains, thus playing with my ‘free money’ and riding the Amazon roller coaster for awhile, yet. My broker called me a week ago to congratulate me. And, truth to tell, I don’t hate to tell you about this, any more than you would! (Can you say ‘tulips’?)”
A.T.: No, Dorothy (who long-time readers will recognize as one of our most informative correspondents), you can’t “take your original money out without paying capital gains.” However many shares you sell, you have to pay tax on the gain versus what you paid for those shares. But what do you know? You’re just a rank amateur (who made $29,000 in six weeks on a $15,000 investment). But I … I am an expert! I am so smart! I know the basics of the tax law! I know what you mean about tulips (Dorothy is of course referring to the Dutch tulip-bulb mania of 1634). And, yes, that’s me out there in front of Starbucks, tin cup in hand, with my expertly lettered sign: “I shorted Amazon.com – spare some change?”
