Why IB doesnt offer an option to this highly tax efficient commision structure?

Discussion in 'Retail Brokers' started by Daal, Jul 24, 2007.

  1. Daal

    Daal

    Clients would opt-in for getting paid no interest on any balances(no matter how high the balance) and in exchange they would pay no fees, commisions, wire fees, ecn fees, debit interest costs, etc UP TO an equal amount that was lost due no interest income after that the structure would go back to whatever the client prefers(bundled, etc).(if they didnt generate enough fees, then the rebates would be saved for the next month, the rebate would not compound and thats a negative but this is for active traders)

    This would help the clients not have to pay income tax on interest income but still 'earn' the money tax-free through those rebates.

    Those who say the IRS might try to stop this are wrong, as a long IB doesnt go around advertising as a way to decrease taxes there would be NOTHING the IRS would be able to do.
    They cant go to wall-mart and issue a fine because they dont like how they are pricing products. Its the clients who are engaging in tax avoidance, which is legal.
    Those with high balances can calculate how much they would have saved(and compounded the savings) in the last five years had they had this option, its can be some serious money depending on the tax rates.
    Unless people are allowed to deduct brokerage fees, wiring fees, interest debit fees from capital gains(which I dont believe they can, at least not in my country) this could be something where IB could help their clients a great deal
     
  2. Great suggestion
     
  3. rayl

    rayl

    Well the debit interest costs are already effectively netted against interest income..... (bec either you're positive or negative on cash).

    Commissions/ECN fees are added to the cost basis, subtracted from the proceeds.

    This just leaves wire fees, cancel/modify fees and market data fees. I think the upside is limited.
     
  4. Daal

    Daal

    If thats the case it still can be a good/bad idea if there a difference between short-term capital gains rates and interest income rates