[ferdek]

Officially, Rackspace is ~30% sold short. Someone is already making tax-free billions shorting it to death.

[koolba]

Why would it be tax free? Until the position is closed out it'd be an unrealized gain but there's nothing special about shorting. Gains are not taxed until they're actually realized by closing out the position.

[ferdek]

Maybe I misremembered something and cannot find a source now, but I think there was some way to avoid paying tax on short sales when company goes bankrupt and gets delisted.

EDIT: See sibling comment.

EDIT 2: Am I reading this right? almost 1,800,000 shares failed to deliver just in one day of Sep 22nd? [0]

[0] https://fintel.io/ss/us/rxt

[SteveNuts]

By leaving the position open forever and taking a loan against the security.

[popcorncowboy]

Not that I'm saying Apollo's strategy was to pump, dump, short and then crash the company, but if you could generate the trading volume to support the play, you could make money at every point in that trade.