Payment in Lieu of Dividend Without Seeing Entry in IBKR Managed Securities Lent Activity

Discussion in 'Interactive Brokers' started by adamovicm, Oct 10, 2021.

  1. Hi,

    I have received for two stocks Payment in Lieu of Dividend, but I don't see those stocks lent through IBKR Managed Securities Lent Activity (Stock Yield Enhancement Program).

    I have one stock registered as lent, but not for two others I have recently received payment in lieu of dividends.

    So I have a question, is this due to my usage of margin (my current margin is 1.25x net liquidation value) so that they lent these stocks without me receiving the interest?

    If so, how it is possible that I receive the lent interest for some stocks, but not for others?

  2. newwurldmn


    Thsts probably what happend. And this is where you get screwed: payment in lieu is not considered a qualified dividend so you pay ordinary income instead of dividend tax rates
    MoreLeverage likes this.
  3. Fain


    Not screwed in most jurisdictions. Most places will treat payment in lieu of dividend, the same as the dividend.
  4. newwurldmn


    not the US.
    MoreLeverage likes this.
  5. Fain


    Yep, not that place. US is the exception to the rule.
  6. IB is very aggressive lending out customers' shares, and the only major broker that does NOT reimburse the customer for the tax cost. Fidelity and Schwab reimburse, if the customer incurs additional tax cost from dividends in lieu. For a buy-and-hold investor with some leverage, this is a hidden and unpublished cost of IB vs. their competitors that is by magnitudes bigger than the small savings in commissions or fees (if any) that IB offers. I like the capabilities of the IB platform, but I am thinking of moving most of my taxable domestic stock account somewhere else.