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Bill
Bill, Enrolled Agent
Category: Tax
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Experience:  EA, CEBS - 34 years experience providing financial advice
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I had a line of credit from Edward Jones that was supported

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I had a line of credit from XXXXX XXXXX that was supported by mutual fund stock. I had reach the maximum amount I could borrow on the line of credit. Since September, with the volatility of the stock market, I have faced a series of margin calls that required the sale of the stock to pay down the line of credit and interest. How should I handle this sale of stock? Is there any tax deduction available?
Submitted: 5 years ago.
Category: Tax
Expert:  Bill replied 5 years ago.

The sale of stock will have to be reported on Schedule D. If the proceeds that you received for the stock are less than your cost basis then you would report capital losses on those sales. If you have a net overall loss after offsetting your losses against any gains that you may have, then up to $3,000 of the losses can be used to offset other income that you may have. If your overall losses exceed $3,000, then the excess amount can be carried over and used next year.

 

The margin interest that you paid may be deductible on Schedule A as an itemized deduction up to the amount of investment income (such as interest, certain dividend income, and elected capital gains in some instances) that you had in the account.

 

See pages 32 - 34 - http://www.irs.gov/pub/irs-pdf/p550.pdf

 

http://www.fool.com/taxes/2000/taxes000721.htm

 

 

 

 

Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3077
Experience: EA, CEBS - 34 years experience providing financial advice
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