June 8, 2008 by admin

1207. Is interest received by dealers counted as earnings?

If you are a dealer in stocks and securities, the dividends and interest that you receive from stocks and bonds while they are in your inventory are earnings from self-employment. Securities bought by a dealer but not held for resale are not part of the trade or business. They are considered a personal investment. The interest and dividends received do not count as earnings from self-employment.

Note: You are a dealer in stocks and securities if:

1. You are a merchant with an established place of business;

2. You regularly engage in buying stocks and bonds in your own name;

3. You sell stocks and bonds to customers for a profit.

Dealers do not buy for the purpose of obtaining dividends or interest, but for "stock in trade"; as another merchant buys hardware or dresses or groceries.

Last Revised: March, 2001