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Originally Posted by FIRE'd@51
I don't think this is correct. After the 2003 tax cuts on dividends, I moved all my dividend paying stocks from my margin account to my cash account, to be sure I would get the 15% rate. It is my understanding that if the stock is "on loan" when it goes ex-dividend, it may not qualify for the favorable rate, since the short seller, and not the corporation, would be paying me the dividend. For this reason (among others), I would think brokers wouldn't be lending stocks held in cash accounts.
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AFAIK, this is mostly true. Stocks in cash accounts can still be loaned out with your express permission. Apparently some people who own heavily shorted stocks have been approached by their brokers with offers of cash compensation in return for permisiion to loan the securities out to eager short sellers willing to pay the freight.
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"And Jesus spake, 'Become thou now fishers of adjustable rate mortgages'" - New Conservative Bible
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