Can I claim a deduction for paying margin calls?

March 5, 2003

Subject:  Margin calls
From:  Jody
Date:  Sat, 8 Feb 2003

Good Morning:

How do I report for tax purposes the payment of some margin calls? I already know how to report margin interest, but not the actual loss of paying the margin itself as I had to 1) sell some stock to cover and 2) send a check to cover the call.

I appreciate any help that you can give me!

Sincerely,
Jody

Answer

Date:  28 Feb 2003

Hello Jody,

Paying a margin call is not tax deductible. It is the repayment of a debt. If you sell stock at a loss to get the cash to pay the margin call, the stock sales and related capital losses are reported on Schedule D.

Good luck!
Mike Gray

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