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

To: Colin Cody who wrote (2099)	3/29/1999 3:16:00 PM
From: Wayners	Respond to of 5810

I'm pretty confused about the deductibility of margin interest using Form 4952. Lines 4a, 4b, 4c and 4d don't make any sense to me. Are only interest and dividends supposed to be included on line 4a? What is the purpose of lines 4b and 4c? Looks to me like you can deduct the margin interest only if: (a) your margin interest is less than the amount of interest and dividends you made and you are not claiming any other investment expenses (i.e. books, real time quotes, magazines, news services, etc.) besides the margin interest. (b) you made money from trading after figuring in your non-margin interest investment expenses that you are deducting and you can deduct no more margin interest than the amount of your trading gains after subtracting out your non-margin interest investment expenses. (c) you lost money trading, but you are not claiming any other investment expenses execept the margin interest.

To: Colin Cody who wrote (2099)	3/29/1999 3:53:00 PM
From: Wayners	Read Replies (1) \| Respond to of 5810

Lets say for example I made $500 in interest from my bank and I made another $500 in interest from interest credited to the cash sweep feature of my brokerage account. Lets say I'm a trader and I had a net long term capital gain of trading of $0.00 and short term capital gains of $100. Lets say I paid my broker $300 in margin interest. Lets say I had other investment expenses of $100.00. 1. I assume that I can only include the $500 in interest from my broker on line 4a--$500.00? 2. I assume lines 4b would be $100.00. 3. I assume line 4c would be $0.00 since there are no long term capital gains. 4. Line 4d would be -$100.00 so it would go to $0.00 5. Line 4e would be $0.00. 6. Line 4f would be $500.00 (Sum of 4a, 4d and 4e) 7. Line 5 would be $100.00. 8. Line 6 would be $400.00. 9. Line 7 would be total investment interest expense $300.00 with nothing carried over from last year minus $400.00 from line 6. You get $300.00 - $400.00 = -$100.00 so line 7 becomes $0.00. 10. Line 8 would be $300.00, the smaller of lines 3 and 6. So in this example you could deduct the full $300.00.

To: Colin Cody who wrote (2099)	4/4/1999 9:38:00 AM
From: dr. z	Read Replies (1) \| Respond to of 5810

Colin, two questions that i have that i hope you can answer. 1. How does the IRS classify LEAPS that are held for more than a year which are then either sold (would this be considered a longterm position) or executed (when does the holding period begin for the stock for classification as a longterm position)? 2. How do you treat an option that is bought in October, 1998 and expires in January, 1999 - is the gain or loss deferred and reported during the 1999 tax year or does the option's value have to be listed as of December 31, 1998 on the schedule for gain/losses when doing your 1998 taxes. thanks