Questions: The characterization of a gain or loss on a short sale of stock as long or short term is determined by: Select one A. The holding period of the asset used to close the position. B. The longer of the holding period of the asset used to close the position or the holding period of the short position. C. The shorter of the holding period of the asset used to close the position or the holding period of the short position. D. The holding period of the short position.

The answer is the first one (or A): the original text in the question...

Explanation for each option: A. The holding period of the asset used to close the position. - This is correct because the characterization of a gain or loss on a short sale of stock as long or short term is determined by the holding period of the asset that is used to close the short position. B. The longer of $a$ or $b$. - This is incorrect because the holding period of the asset used to close the position is the determining factor, not the longer of two periods. C. The shorter of $a$ or $b$. - This is incorrect because the holding period of the asset used to close the position is the determining factor, not the shorter of two periods. D. The holding period of the short position. - This is incorrect because the holding period of the short position itself does not determine the characterization; it is the holding period of the asset used to close the position that matters.

Summary: The characterization of a gain or loss on a short sale of stock as long or short term is determined by the holding period of the asset used to close the position. Therefore, the correct answer is A.