A situation in which a person is both long and short in the same security at the same time in his/her account, a practice usually employed to defer tax liability on capital gains. Although the customer sells the stock short, he/she actually owns the security, which is held in the broker's ''box." The aim is to protect a capital gain in owned shares, while deferring the taxes due if the shares were actually sold and the capital gain reported. This way, the investor can wait until he or she is in a more favorable tax situation to sell the securities.