muscleman

I guess this is the part that I think is really weird. Why would they choose a practice that results in improper withholding rates? I just followed up with prior response with this as well: I guess this is the issue I have: you responded "In the case of the foreign dividend processing and withholding, brokers do have various methods to choose. Whatever practice is elected, the customers feel the effects either in broker pricing or a preferential non-resident tax withholding rate." What I don't understand is why IB is deliberately using a business practice that they know results in improper tax withholding in IRAs? This doesn't seem like a matter of choosing among multiple appropriate optional business practices as your response implies. It seems to me that if improper tax withholding is a result of the business practice, then that business practice is inappropriate and IB should correct it. Note that I have not had this issue with any other broker in my experience; IB is the outlier. Ok. So does this only affects IRA accounts? Is there any similar tax issues for regular accounts? It seems like I should just keep my 401k in Fidelity. :) I was thinking about moving to IB to get a rollover IRA, but it doesn't seems to be needed now.

I sent IB a message about your question, and here is their reply. It seems like the tax withholding from CAD stock dividends should be exempt. Did you have this problem recently, or it happened a lot time ago? ========================================================== Thank you for your patience during the review of your issue and claim. While the inquiry should have been acknowledged, the issue was being addressed. The current tax treaty between the US and Canada does afford a great benefit to IRA holders. This means that the non-resident tax withholding is exempt. Since IB implemented the change, we do not directly withhold the tax from IRAs. For this reason, a claim of withholding warrants a review. It turns out that in some instances CAD taxes can be withheld by the depository prior to remittance of the distribution to IB and the subsequent credit of the net distribution to the accounts of any U.S. persons. Accordingly, IB has no ability to reverse or reclaim the withholding on behalf of its clients. In addition, as IB did not remit the withholdings to the tax authority, we do not report such withholdings to either the tax authority or clients on their year-end tax forms. Any CAD taxes withheld in your IRA would have been withheld at the source on each payment. This was not applied by IB nor remitted by IB to the Canadian Revenue Agency. I would be happy, however, to review any specific transactions. Non- US tax withholding is applied in two situations. Either IB will withhold taxes or the depository, paying agent. If IB withholds the taxes, then IB can reverse the taxes and/or issue tax reports for non-IRA accounts. If the depository withholds the taxes, then IB cannot reclaim exempt taxes nor issue tax forms on the withholding. This applies to IRA accounts and non-IRA accounts. Why would this type of withholding at the source take place? Many countries may impose a withholding tax on income (dividends) paid to entities domiciled outside of the country. IB is domiciled in the United States. The tax withheld is usually "withheld at the source" when the non-resident entity receives payment. What are your options? You may wish to contact a qualified tax advisor about this situation. Or, refer to the IRS Publication 514, Foreign Tax Credit for Individuals, and the IRS instructions Form 116, Foreign Tax Credit for guidance applicable to your personal situation. How can this be avoided in the future? Positions in such dividend paying stocks should be closed prior to the ex-dividend date or not held in the account. Although no situations have occurred since IB implemented the current treaty exemption, I would prefer to review any specific transaction in your account. If you have any particular payments, please let me know. Regards, Kawone H Retirement Accounts and Tax Reporting

I see. So there is a lot of leeway to get by fraudulent conveyance. Could you please explain a bit more about the Orchard case? If I understand correctly, SHLD wanted OSH to carry a boat load of debt at the time of spin off, but worried if that would case fraudulent conveyance, so they didn't do that. Instead they waited for a year for the fraudulent conveyance case to become invalid, and then they let OSH borrow money and pay SHLD the dividend. Then OSH got into chp 11 but no one could claim fraudulent conveyance now? In addition to SHLD, I am also looking at FIATY's potential spin off. Its CEO once mentioned that in the worst case, they can spin off Ferrari and Chrysler to shareholders, and let Fiat die. So that is a bit different from the SHLD vs OSH case, because the child is the valuable one instead of the parent. How would they avoid fraudulent conveyance in that case?

No one?

I'm interested to see what Ackman's proposal will be, whereby he expects the common to do so well even more so than the prefs. He is obviously expecting more than a 3x from the common given that is where most of the prefs are relative to par After reading the court documents and posts in this forum, I kinda feel like the common shares the same risk as the preferred, but the upside for common seems higher. What do you think? If the current taking clause suits are deemed eligible to go to trial, then both common and preferred should recover. Is there a scenario where common is wiped out but preferred is fully recovered?

What is EBIT/Tev?

I have been thinking about SHLD and some other similar companies in this late night, and I remember famous value investors said that they could spin off a lot of wonderful assets because their debt is unencumbered. I am a little bit confused about this. I thought there was only one case that would make the spin off unrestricted, which is the case like MBIA. They have two subs, and the structured sub's debt is non-recourse to the parent. But for SHLD, it doesn't look like the debt of the subs are non-recourse, but they still have spun off a few assets, and they are currently talking about spinning off more. Can anyone please enlighten me on this matter? If they spin off the wonderful assets in a nightmare scenario, and then the parent goes to bankruptcy, doesn't that mean fraudulent conveyance? I know that fraudulent conveyance has 1 year limit, so if they keep some assets in the parent to make it afloat for one year, it should be good? Anyway, what can restrict a company from spinning off the wondering assets and in a nightmare scenario, protect equity shareholders?

I prefer a desktop with a big screen for trading and everyday use. Then I have an ipad for travel. I think that should be sufficient. There is no need for a laptop.

I think the most logical plan is to do nothing and keep F&F in its current state. Only in this way will these two companies' package bonds trade like T bills, and have high demand.

this pdf file is damaged. Can you check what is wrong？

If everything goes back to normal, preferred will be paid in par, and common will be worth $150 bn market cap, if Fannie mae makes $15 bn a year. So common has more upside in this scenario. In BB's plan, common may have no value after run off, but I think that plan is not viable.

Thank you! I opened an account with them and plan to use it as my primary account. :)

This sounds like a cool bank too, but I bet they don't have as many brunches as BECU and its partners. :)

I did some research recently, and I would like to find a checking account that is: 1. Totally free, with no requirements to meet in order to waive the monthly fees. 2. Preferrably pay an interest on the checking account, but this is not mandatory. 3. Have a lot of brunches and ATMs, so banking will be easier for me. I started by looking at the big four banks. unfortunately none of them met these criteria for their basic banking packages, though I agree that the basic criteria to meet to waive the monthly fees isn't too difficult. I did consider Bank of America's advantage checking along with a Merrill Edge account, because that would give me free checking account plus free 30 trades per month in my IRA. However, they said in the IRA, if I sell a stock, I cannot use the unsettled proceeds to buy another stock. I have to wait for 3 days, which I do not like at all. Then I found that a lot of non-profit credit unions offer better deals. I opened an account with BECU.org. They have a lot of brunches in the Seattle area. Not only that, but I can bank with their partner CUs across the state. Out of curiosity, in their website, I searched for ATMs in Bozeman, MT. (I visited that place this summer and knew it is a very rural area.) There were nearly 10 ATMs nearby. Then I searched for brunches for Key bank, Chase and Bank of America, but I could not find any brunches over there. It seems to me that with so many partner CU brunches, this network is actually more convenient than any of the big banks. I think what these small CUs offer is more competitive than the big banks. What do you think?

I don't have any clue about it. Will it be this low for the next 10 years, or will it go up? What is the best way to play this interest rate game then?

Have you every thought about whether BB's plan is viable or not? The current bonds that F&F sells are attractive only because they are considered almost as risk free as the T bills. But for BB's plan, the new co's products will not be as riskless, so why would the market continue to buy those products? Maybe they will, but the rate will be much higher than the T bills, and that would be bad for the real estate market. I think the safest thing that the government would do is to continue to keep F&F running as it is, and let the courts decide if they need to pay off the preferred.

But what about withholding tax for IRA accounts?

Do you mean the dividend tax withholding or the capital gain tax withholding? Wow, I didn't know that they withhold foreign tax in IRA accounts! :o I was thinking about creating an IRA in IB, because they can trade international stocks nicely, but now I have to think twice.

I agree that it's a brilliant proposal. I'm just not sure whether it'll happen. My sense is that Fannie & Freddie would have to provide $34.6 billion in cash to the NewCo. I'm not sure what you mean by "credited toward capital"... In any case, I think we've covered the legal aspect of the case, and I think that there are significant hurdles for the private preferred holders. The leverage is not terribly strong IMHO... Yes but someone has to provide the paid-in capital for the equity in the first place... it's not like they can just raise $17.4 billion in new equity and then split it as if they had $52 billion of paid in capital. Yeah. This is what's confusing to me as well. Why should the government implement this proposal? Why not just keep the current Fannie and Freddie running and keep making $30 bn a quarter for the US government forever?

The data could be wrong. We need to look at individual companies inside this GREK. GREK is trading at a premium to NAV, so I think it is better to directly buy the companies inside.

Are you talking about the $10/month fee? If you look closely at other discount brokers you will usually find that you are paying more fees in other areas. For instance a lot of discount brokers bake in 1.5% to 2% spread in their currency exchange rates on a one-direction exchange. If you change $10,000 USD to CAD just once during the year, then you will pay about $150-$200 in spread at just about every other discount broker (here in Canada at least). And you have to dig deep to find any reference to this (or observe it yourself by comparing with the spot market) they don't put out a big warning telling you that you are getting screwed on your occasional forex conversions. Correct. This is what makes me unhappy with Fidelity. I moved away my individual account to IB, and still thinking about where to move my IRA to. Does anyone use IB's IRA?

I skimmed through it and didn't find many valid points. But I am no lawyer, so I hope someone more experienced could share some input. :)

ok. So you have to do a forex transaction first, right? I did that when I had my individual account there, and just the forex cost me 1% per side. Not necessarily. Often US market makers will hold foreign shares, I hold my Swiss stock in dollars. Fidelity called market makers, found one who had some shares and I purchased them, no forex. I'm sure there was some forex built into the market makers trade, but it was probably much lower. The price I purchased at was almost exactly the quote from CHF-USD at the current mark. I investigated this for a Danish stock as well, they found someone with inventory in the US. These are tiny stocks, I'm talking less than €100m market caps and US market makers held them in inventory. Here's the rub, you pay a $50 fee because the trade isn't DTC cleared, and then the actual commission to Fidelity is $50, so it's $80 to make the trade each way. You asked in an earlier post about cash with Fidelity, I've never deposited cash, but you can do it at one of their local branches. They will accept foreign currency as well, but they only allow withdrawal in dollars. Oh... Then I think I will go with Fidelity IRA. But I don't understand why for their individual account, I could do a forex transaction and buy foreign stocks, but I had to pay 1% per side? Anyway, if IRA has the better rate, I will go with it. :)

I bought a 10% position in BPOP at $26 last week. My theory is that Peurto Rico muni crisis is overblown, and that even if there is some issue, BPOP's exposure is small enough. I think the current 2.6% NPA is quite manageable, so there should no longer be 250 million a year loan loss provision, so the forward P/E should be 5, which is quite low.

I heard Italians are the most romantic in the world and typically date a few women at the same time. So why are you different? ;D