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Two friends and I have been wondering about this for many YEARS. We've never been able to find a clear answer, and neither have our accountants.

Don't bother phoning the CRA because they have no idea either. The phone agents can handle simple matters, but they don't have definitive information on the short selling.

In the end I used Schedule 3 and reported them on the capital gains account. It's still a buy, a sell, and a gain or loss.
 
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