Is there ever a situation where the capital appreciation from shorting a stock would be considered long term?
My understanding is that the "holding period" for the stock is the length of time the stock bought to close out the short sale is held. Since the close out usually happens immediately, this implies that any gain is taxed as a short term gain.
I am wondering if there are any exceptions to this. For example, what if the stock is shorted for some period of time, and later shares are bought long and held for > 1 year. After that year, the short is closed out using the bought shares. Would this be considered a long term capital gain, or would it be considered "constructive?"