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Non-Tech : Waterhouse Securities -- Ignore unavailable to you. Want to Upgrade?

To: Thean who wrote (265)	1/24/1998 9:34:00 PM
From: John M. Hammer	Read Replies (1) \| Respond to of 2076

Thean, <One can place short trades on the WebBroker but CANNOT cover. One has to call the branch to cover the short position. I made the mistake of placing buy order thinking I would cover the short.> That seems weird. I've gone short on option positions many times with WebBroker. I can't understand why short stock positions would be more difficult for them to handle. In any case, doing a sell ought to establish the position and doing a buy ought to bring the shares needed to cover into the account. If WebBroker is too stupid to handle the cover automatically, then the account officer ought to be able to just ledger over the bought-in stock to cover the existing short position - and doing so shouldn't incur any charge at all. Your issue concerning margin interest charged between the buy and the ledger could be a problem, though. Obviously, WebBroker ought to be rewritten a little so that it can handle short sales and covers of stock positions without recourse to human meddling. <John, a question on regular IRA to Roth IRA conversion. How does one calculate the taxable earning? For example, I contributed a total of $8000 in the last 4 years in my regular IRA account. The net balance on my account currently is $10000. Do I owe $2000 of taxable earning when I convert? If so, is it correct that I can split this $2000 of taxable income into four parts and only pay tax on $500 this year, and another $500 tax next year and so forth. Where on 1040 do I put this additional $500 of taxable income due to this conversion?> I am not a tax professional, yadda-yadda, but this is how I understand this situation: The taxable distribution is equal to the total value transferred minus the non-deductible contributions. Assuming that all of your $8000 in contributions were non-deductible, and the balance is $10000, and you are transferring the entire balance, this would increase your taxable income by $2000. If your $8000 in contributions wasfully deductible when you made them, then your entire $10000 balance being transferred will increase your taxable income. (Let's assume that the contributions were all non-deductible for the remainder of these examples.) If you make the conversion in 1998, the $2000 of taxable income must be spread out over four consecutive tax years as evenly as possible - - - this is not optional! Therefore, you will add $500 to your AGI for all purposes (except determining your qualification to make IRA to Roth IRA rollovers) the next four times you do your taxes. As for where on the 1040 this will be represented, well, that is anybody's guess. They'll come out with the 1998 tax forms real late this year probably, and we won't know the answer until November or so. But it doesn't matter now, and we will all know as soon as it becomes relevant for tax time. Best wishes, John