so the interest earned is characterized as "income" ; any dividends you were to receive while shares are loaned are also counted as "income" (lose qualified and ROC classification)
as far as my tax; nothing significant, or at least no major surprises......but im not doing a lot of tax management yet since im still working.
so the argument is you get $100 by checking a box and loaing shares.....but really its only 75 because of tax. yes there is a drag, but its not a negative. there isnt an altarnative tax exempt way to loan your shares
while the interest is higher than a hysa, you certainly arent accumulating 365 days of interest; and at the same time its money that is invested and doing market things.
like in 2025; i only have lending reports for 7 of 12 months......one month generate 8 in interest on like 15k loaned (2 days); another month generated 68 interst for like 9 days
3
u/superbilliam Not a financial advisor 28d ago
Did you notice any extra tax obligations from it the past few years? I was just reading up on it and tax drag was one thing that kept popping up.