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I proposed buying stock on margin that pays a dividend (e.g. MO). The stock pays a higher dividend percentage than the brokerage firm is currently charging in margin interest.

1. I understand I would need to hold MO for some time (60 days?) to have the lower tax rate on the dividends.
2. The margin interest is deductable (essentially at the normal rate I pay). Would the fact that I have this deduction raise the tax rate on the dividend? Someone said it would. During the times that I am paying margin interest, I expect that I will own other stocks (i.e., all my dividend paying stocks together will never be more than my account value).

Any comments and anything else I'm overlooking?

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