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Strategies & Market Trends : Income Taxes and Record Keeping ( tax ) -- Ignore unavailable to you. Want to Upgrade?

To: Peter Singleton who wrote (380)	1/4/1998 11:06:00 AM
From: Colin Cody	Read Replies (3) \| Respond to of 5810

Peter, IMO your method is OK to a point. One thing an agent SHOULD do is trace to the source of funds used to BUY that particular security, and if THOSE funds were margin loans, he SHOULD then RECLASS that amount from investment debt to personal debt IMO. If he did I think you may still be able to agrue the point a bit, but it would be better to just be more careful up front. . Such as only withdrawing THE PROFIT from a sale. That way the cost portion would revert back to repaying the original borrowings. . You might start always withdrawing all PROFITS on the settlement day, and transferring to personal funds. Yes you margin balance will be higher, but you might stand up better in audit. An agent might also look at this ploy and ask how you'll ever make up "losses" in you always withdraw each profit. . When you have more than adequate personal funds available, you might make margin debt repayments from there... . Colin

To: Peter Singleton who wrote (380)	1/4/1998 11:18:00 PM
From: hooter	Respond to of 5810

Peter, according to Lasser's tax guide, when loan proceeds are used for various purposes, the order of repayment of that debt is assumed to be in the following order: 1) personal debt 2) investment and passive activity debt 3) real estate activity debt 4) former passive activity debt 5) business debt Therefore it seems to me that if you withdraw funds from a margin account to be used for personal purposes, any subsequent paying down of your outstanding debit balance would go against personal debt first. Just my take on reading Lasser's tax guide.