Shorted a stock that issues a Schedule K-1 (USO) , do I need to do a Schedule K-1 on my tax return?

[befuddled4]

I shorted an ETF last year, United States Oil Fund (USO). It issues a Schedule K-1. But because I shorted it, and never actually owned it, do I skip doing all the Schedule K-1 stuff?

My short position was only for a couple of days. It was only 100 shares. I made a very small profit. I don't think there was any dividend activity or anything like that during that period.

So I would really like to hear I can skip doing the Schedule K-1 stuff because it is so complicated.

I have one extra complication I want to mention. The USO people sent me an incorrect Schedule K-1 form in the mail. They screwed up and messed up my transaction dates. The effect is that it makes it look like I was long the USO, not short.  I called the support phone number to correct it. The guy had reservations about fixing my dates because he said their system doesn't handle shorts very well. But I told him it is wrong and it is already causing me problems, so he made the changes. But I can no longer download a corrected TXF file because it now says "Ownership information is incorrect and must be corrected before a K1 can be created." I didn't have this problem before because I had successfully downloaded the original incorrect version, so I presume this is the kind of problem the representative was worried about.

Any way, for curiosity, I was wondering what would happen if I tried doing the Schedule K-1 stuff in TurboTax with the old incorrect TXF, and if there was a way I could fix the numbers so it correctly shows I was short. I found one part where I could change the values for "Capital contributed during the year" and "Withdrawals and distributions" so the first is negative and the latter is positive.

But going deeper into it, I hit a part where Box 16 "Schedule K-3 is attached if checked", and my form has a check. I didn't get a Schedule K-3. A web search says the form often comes very late (October-ish), and I have to file an extension and wait.

So I would really like to hear that I don't need to do any of this Schedule K-1 stuff for my tax return because I was in a short position. I'd rather not have to wait until October to file. And I don't have experience on how much money if any I need to pay for the estimated taxes on this. (My expectation is $0 because my position was only for a couple of days.) And now because they corrected my dates, I'm worried their system may never send me a K-3 and I will never know if that was because I didn't need it because I didn't actually have to do the K-1/K-3 stuff because I was short, or because their system is now sufficiently broken because they can't handle the short.

I appreciate any responses and insights into this situation. Thank you.

[fanfare]

Did you use a broker to trade USO?

It will appear on your consolidated 1099-B.

@befuddled4 

[befuddled4]

Yes, I used a brokerage (Schwab) for the trade. As you said, it is on the Consolidated 1099-B. I see the characters SS in a column which I don't know what it means, but maybe I can speculate it represents Short Sale.

But even though it is there, I still don't know if that means I need to do all the Schedule K-1 stuff. It might at least give documentation evidence to the IRS that I was short, but I don't know if the IRS requires me to do the Schedule K-1 stuff even for a short position. (Since I'm a borrower of shares during a short sale, I could argue I was never an owner, and thus never a partner, and thus the form has no meaning, but I am not a tax expert so I really don't know what the IRS wants.)

[befuddled4]

I just found the company's FAQ. (Very frustrated that googling didn't help me find this much earlier.)

[link removed]

Will I get a K-1 if I only bought shares to cover a short position?

Covering a short position generally doesn’t generate a Schedule K-1. Some brokers may not distinguish between long and short positions when reporting transactions to the Fund’s tax accountants. If you received a Schedule K-1 due to covering a short position, please contact Tax Package Support at [phone number removed] for correction, if needed. Please note that our Tax Package Support staff is not qualified to give tax advice or answer questions regarding your particular tax situation.

So I guess I'm safe and I'll skip all the Schedule K-1 stuff. But if anybody knows otherwise, I'd appreciate hearing it. 

Thanks