I sold stock as short sale, I did not buy back yet. How I can report this short sale on my income tax return.

Answer 1

you need for Schedule D to agree or exceed the total gross proceeds reported on form 1099B. Therefore, the correct reporting of a short sale not yet closed is to list the stock and identify it as a short not yet closed, the date of purchase should be left blank, the date sold is the date you entered into the short contract (not the settlement date), the proceeds are what you got for the sale and the cost basis is the same yeilding a zero gain.

Assuming you close the sale in 2007 -
When you file your return, on schedule D, list the stock with the date sold (same as the prior return), date purchased is the date you closed the sale, proceeds are same as lasy year (SALY) cost is what you paid to buy the stock back. You will likely need to override the Long or short term in the computer software (They all let you). Gain or loss will be computed at that time.

Hopefully it is a gain!

Answer 2

It has been some years since I had this situation, but then the correct procedure was to enter the sale on Schedule D with

"Open Short" written in as the date acquired and
"0.00" entered as the gain/loss amount.