Why is there no tax liability in short sale against the box?
Say for instance in own 100 units of Company A which sells for $1 and this $100 constitute 70% of my total asset. I am also an executive of the company and company policy prohibits me from selling. To monetize the position, I approached a broker to borrow 99% of my holdings (99 units) in Company A and sold it in the market for $1 each, thereby generating $99 which I can invest in order asset classes to diversify my portfolio.
The question is: Why is there no tax liability for the sale?
Either i own the stock or not, as long as an asset has been sold, there should some form of tax liability accompnying the sale. So how come Short Sale against the Box manages to evade this tax liability?