In order to get FN to treat a transaction as a short sale, the stock must be under the FORMAT type "common/preferred stocks". So if you change the "user defined" category to your separate brokerage accounts, you must change each stock liability format to common/preferred stocks in order to get the system to treat it as a short sale. And you need to change the format prior to posting the transaction.

I have changed my original entry from putting the short sale under assets class and marketable securities to putting it in the liabilities class. You can put the short sales under marketable securities and your share quantity will show as a "-". But you would not need to change your format type.

I hope this clears up the question.

1. You must first cover the short sale with a buy back at the short sale proceeds amount. This will give you a zero gain/loss if you put the short sale as an asset, or it will zero the balance if you put the short sale as a liability.

2. Make sure you change the short sale account tax code to "no tax effect"
(Accounts|Tax Code changes select the proper account and choose "no tax effect".)

3. Then you go ahead and sell the original underlying shares at the price and date of the short sale.