11-09-2003, 06:21 AM
| |||
| |||
 Re: No low rates for dividends paid on lent-out stock? D.F. wrote: - quote - > I wanted to bring this up again in case some folks had some
It is a very real and potentially serious problem that's> new thoughts. There was no response back in June. The tax > effects of someone's dividend/distribution paying > shares/units being lent out from a margin account is a topic > that I suspect will become more noticed during the upcoming > tax season. going to be "in play" here shortly as people begin to figure out just what it means. As I recall, the IRS has "kind of" given brokerage firms a pass for this reporting year, but next year the matter will be fully in play--and could create some nasty "unexpected" surprises if the brokerage firms aren't able to allocate all of the "tainted" dividends to tax indifferent accounts (as I recall, the IRS guidance does allow them to do that if they choose). -- Ed Zollars, CPA Phoenix, Arizona << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
|
#-1
11-05-2003, 09:07 PM
| |||
| |||
| Re: No low rates for dividends paid on lent-out stock? Rich Carreiro wrote: - quote - > I've read some discussion which says a taxpayer does not
I wanted to bring this up again in case some folks had some> receive the new lower dividend rates on dividends which are > paid out while the taxpayer's stock has been lent out (with > or without his knowledge) so another customer of the broker > can do a short sale. > On the surface this makes sense, since double-dipping needs > to be prevented. If A's stock is lent to B, who short-sells > to C, and then the stock pays $100 of dividends, C will > receive $100 from the company, B will be charged $100 by his > broker, and the broker will give that $100 to A. Obviously > A and C cannot both get the lower rate, since they together > received $200 but the company only paid out $100 of > qualified dividends. > But in practice it'll be horrible -- stock is routinely > hypothecated without the knowledge of account owners and I > can just imagine the screams when people see that not all > their ostensibly qualified dividends were really qualified. > And then there will be what the brokers will have to deal > with --correlating stock hypothication to dividend payouts. > It's true that a concerned investor can tell his broker to > journal the stock to the cash side of his account (so it > cannot be lent out), but then the stock won't count for > margin purposes. > Another angle is that mutual funds routinely lend out their > portfolios to pick up a little more cash. If they do this, > they'll be costing their shareholders qualified dividends. new thoughts. There was no response back in June. The tax effects of someone's dividend/distribution paying shares/units being lent out from a margin account is a topic that I suspect will become more noticed during the upcoming tax season. I would have thought there would be a lot of discussion of this. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
| Tags |
| dividends, lentout, low, paid, rates, stock |
Similar Threads | ||||
| Thread | Forum | Replies | Last Post | |
| How Money 2007 treats dividends for stock with multiple purchases Dan: I am not sure if this has been covered previously or not - I tried searching and could not find anything. I have found out that it appears that... | Microsoft Money | 2 | 12-12-2006 03:23 AM | |
| Stock dividends not categorized appropriately John Girard: In Money 2k5, I've got a few stock accounts with separate cash and investment transaction tracking. When I enter receipt of a dividend for a... | Microsoft Money | 8 | 07-11-2005 05:29 AM | |
| Duplicate Stock Dividends George: Hello all, I am a new user of Money 2004. I used Money 2002 but did not use the portfolio management part of the software before. I have been... | Microsoft Money | 1 | 12-10-2003 12:34 PM | |
| Withholding tax on Dividends paid to NRA 0b3hks001@sneakemail.com: The withholding tax used to be 30% where there is no lower applicable tax treaty rate. With the reduction in taxes on dividends on U.S.... | Taxes | 3 | 07-17-2003 02:07 PM | |
| Thread Tools | |
| Display Modes | |
| |
Linear Mode
