Information Short Sellers Should Know (Those who allow brokers to short their units)
This may have been covered before with all the activity on the board lately it's hard to follow all the threads, but I thought those who think that allowing brokerages to borrow their units to sell short should be aware of this:
Treatment of Short Sales
A unitholder whose units are loaned to a "short seller" to cover a short sale of units may be considered as having disposed of those units. If so, he would no longer be a partner for tax purposes with respect to those units during the period of the loan and may recognize gain or loss from the disposition. As a result, during this period:
• none of our income, gain, loss or deduction with respect to those units would be reportable by the unitholder;
• any cash distributions received by the unitholder with respect to those units would be fully taxable; and
• all of these distributions would appear to be ordinary income
I've checked all other the street. There are no LNCO shares to be borrowed. LINE on the other hand is a relatively easy locate meaning an investor that wants to short line will have no problem finding the shares to short. Most of the shares that are borrowed are from large institutional accounts.