Does anyone have a schedule that shows what margin interest goes to the 4952 each year. Remember, in the margin account the interest is charged monthly, but not always paid then. Does that make a difference??? Does margin investment interest get used in the year the broker statement calls it such or do we have to figure out what was paid in the year????
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I believe margin interest is deducted from the account holders funds. I have only seen a call for funds from the account holder when there is a shortage from various trade postions and when there is a "Margin Call" ( meaning the value of stocks has dropped below certain allowed credit limit).
I have always deducted margin interest per broker statement.This post is for discussion purposes only and should be verified with other sources before actual use.
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I hope you are right
Thanks a lot.Comment
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Concur with Bob. As for the "when paid" issue, the margin interest IS paid monthly from the client's funds on deposit with the broker. so it's the same as if client wrote a check and mailed it to broker.ChEAr$,
Harlan Lunsford, EA n LAComment
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Remember
"margin account" by its name does not have cash (funds). Most margins may have all dividends going into to it - and if based on %s may get the margin calls for cash or stock(s) sold to cover. I am going to find out. Unfortunately this has some bigger numbers ar stake. The State of Minnesota audits have been asking for "investment interest" information and I believe it is because adding the margin interest to the margin account does not give you a deduction. My case is really different in that 2008 - the audit year - with investment interest carryforward my client needed cash so there was selling of stocks for gains paying the margin account way down and electing to use up the carryforward against the capital gains. Confusing, but he has been running the margin account since 2001. Now I will find out if they agree with me. I think all the deductions in total will remain the same. The question will be in what years it will be allowed.
Thanks.Comment
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My understanding of a margin account is that it is backed by money but the broker will extend additional credit over and above the liquid amount. I don't know of any broker that gives credit with no cash invested in the account. By cash I mean stocks that can be turned into cash also. I believe all margin interest is settled within the month...???
The SEC has rules against margin accounts with NO liquidity.Last edited by BOB W; 04-21-2010, 09:52 AM.This post is for discussion purposes only and should be verified with other sources before actual use.
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I do not
think it is settled with a cash payment, unless it takes you over the margin limits. You do have stocks and dividends from them coming into the account that can be offset, but additional cash to the account is not required unless called because of margin limits. You have the "call" which gives time to fund with outside cash, if not you have stock sales forced to convert to cash to get back to the required %s.Comment
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So are you saying that your audit should be no problem?Originally posted by JON View PostThis post is for discussion purposes only and should be verified with other sources before actual use.
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For 2008
there should be no problem. If they look at 2006 and 2007 they may be able to limit some, but because of the carryover I hope 2008 absorbs easily. I do not know for sure how they allocate the payments on the margin account, but because of all the selling I hope no matter how they do it there should be no limits on the investment interest deduction..??Comment
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