What are the tax consequences of loaning securities to one's broker aside from the dividends being paid as payment-in-lieu taxed as income?

External question — Personal Finance Stack Exchange Author: Franck Dernoncourt Original post: https://money.stackexchange.com/questions/149288 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. I'm trying to understand the tax consequences of loaning securities to one's broker in the United States: The dividends of the loaned security are being paid as payment-in-lieu, which is taxed as income . Long-term capital gains/losses made on the loaned security will not be turned into short-term capital gains/losses. Is there any other tax consequences of loaning securities to one's broker aside from the dividends being paid as payment-in-lieu taxed as income?

External answer — Personal Finance Stack Exchange Author: littleadv Original post: https://money.stackexchange.com/a/149292 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. You're also being paid interest for the loan, and you may lose the securities if they never get back to you, only getting the 102% coverage the insurance provides (which leads to realizing gain/loss when you may not have intended to).