Baldwin, IRAs to my understanding must ALWAYS be Type 1 accounts. I don't know the reason in IRS law for this, but brokers seem to have this rule in place.
As an aside the IRS says, I believe, that an IRA or pension that borrows funds to invest (i.e. a Type 2 margin account) is subject to the UBTI, which as an annual tax on the profits earned.
Regardless of who owns DCTC (or any OTC-BB stock) be it an individual or an IRA, they are held in a Type 1 account. The rule that puts them in a Type 1 account has everything to do with trading on the OTC-BB. If on top of that they don't belong in a Type 2 account for other reasons (such as being owned by an IRA) that's just over-kill.
Fact is, no OTC-BB stock out there may go into a Type 2 "Margin" account.
And to follow that through, any stock in a Type 1 "Cash" account (which includes ALL OTC-BB stocks) may not be declared /borrowed for
shorting purposes.
And finally to wrap up, this is ALL THEORY ie. these are the RULES.
Well financed men with powerful connections can and do many things that are not allowed "by the rules". That doesn't make it legal.
Who follows the Laws and the Rules? Well as an example:
The Brady Bill proponents promissed that if passed, no one would be shot with a gun ever again. Yet, we've had more mass killings in our schools since the Brady Bill was passed than I can remember ever before.
Most of our protectors in government and SEC bureaucrats in particular are worthless. Much like the effectiveness of enforment regards the running hooch in the 1920s, them that does do, the rest of us obey the law.
Colin |
