Getting a Tax Handle on HOLDRs

Merrill Lynch Internet HOLDRs are securities that offer ownership in 20 stocks with a single investment. They were launched last September in two flavors, Internet (HHH Quote) and Biotech (BBH Quote), and Merrill Lynch plans to add telecom and pharmaceutical versions to its lineup. (See Tuesday's Dear Dagen for more details.)

One interesting feature of these securities is the option to redeem them (in 100-share lots) and get shares of the underlying stocks in return. That brings up an interesting question about the cost basis of these shares, and that's where the Tax Forum comes in. We'll look at that issue today.

Also on tap: How to consolidate your IRA accounts, when to deduct margin interest and an update from the electronic tax-filing world.

Ask your tax questions on the TSC Tax Forum board ...