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Non-Tech : MB TRADING -- Ignore unavailable to you. Want to Upgrade?

To: tom pope who wrote (4506)	4/11/1999 4:43:00 PM
From: Sheri Kohn	Respond to of 7382

Yes, thats the same message I got. Maybe this is a little loophole in their software? It sure surprised me. Anyway, they allowed my trade, I covered that day, and I never heard another word about it, so ......

To: tom pope who wrote (4506)	4/12/1999 12:05:00 PM
From: Dan Swartzendruber	Read Replies (1) \| Respond to of 7382

>>Can you short stocks in IRAs at ABW? You can at Schwab providing you have the cash to buy it back<< That's surprising. I thought no brokerage permitted short sales from an IRA under any circumstances. I think you're confusing short sales with margin activity. Under no circumstances can an IRA be a margin account, since with a margin account, the assets are collateral for the brokerage loan, and federal law prohibits use of IRA assets as collateral.

To: tom pope who wrote (4506)	4/12/1999 11:37:00 PM
From: Colin Cody	Read Replies (2) \| Respond to of 7382

Having done a prohibited transaction the IRA is disqualified by the IRS retro-active to January 1st of the year of the prohibited transaction. The penalty for removing all the funds from the IRA after such a prohibited transaction is that the taxpayer needs to pick up all the proceeds as income (no rollover allowed) and if he's under age 50.5 then the 10% penalty needs to be paid. The penalty for NOT removing all the funds from the IRA after such a prohibited transaction is that there is an annual penalty due (about 6% or so per year) until such time as the taxpayer removes all the funds as per above. Only the specific IRA account that had the prohibited transaction is disqualified. That's one reason for having multiple IRA accounts, so you don't taint all your IRAs with one mistake. I have never seen a court case where the taxpayer prevailed under such circumstances, even if it wasn't the taxpayer's fault. Clinton recently has stated that he wants to lighten this rule up to allow consideration for incompetent persons, and certain other taxpayers who can not handle their own affairs. Colin

To: tom pope who wrote (4506)	4/14/1999 2:21:00 AM
From: Colin Cody	Read Replies (1) \| Respond to of 7382

tom I asked my IRA people your question. They said it is impossible to do, and I insisted that it can be done... I've done it myself many times. They said "you must mean in a non-IRA account". And in my case is was. They claim in an IRA there are more safeguards. Anyway, upon my insistence I asked if the account would be disqualified if in fact somehow I was "short" a position at the end of the day. They said "no, contact us immediately and we'd have to REVERSE THE TRADE" i.e. they eat it, because they screwed up. I didn't get into what if there was a large gain or loss between the trade and the reversal. Colin