{"id":180338,"date":"2021-06-22T16:26:00","date_gmt":"2021-06-22T20:26:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/glossary-terms\/payment-in-lieu-of-dividends\/"},"modified":"2025-04-09T11:08:13","modified_gmt":"2025-04-09T15:08:13","slug":"payment-in-lieu-of-dividends","status":"publish","type":"glossary-terms","link":"https:\/\/www.interactivebrokers.com\/campus\/glossary-terms\/payment-in-lieu-of-dividends\/","title":{"rendered":"Payment in Lieu of Dividends"},"content":{"rendered":"<p>A Payment in Lieu, (PIL) refers to a cash credit or debit made to an account in recognition of a cash dividend paid to stockholders of the issuer.<\/p>\n<p><strong>Received<\/strong><\/p>\n<p>A broker who finances client purchases of securities via margin loan is allowed by regulation to loan or pledge as collateral that client\u2019s securities.\u00a0 If a stock that you own is pledged or loaned by IBKR when it pays a dividend, you will not receive an ordinary dividend but a payment-in-lieu of a dividend (PIL).\u00a0 It is also possible to receive PIL if a stock is on-loan through the Stock Yield Enhancement Program.<\/p>\n<p>The PIL amount is received by IBKR and passed onto the customer. These payments are treated as ordinary income for U.S. taxpayers and are not generally eligible for the qualified dividend tax rate. IBKR reports payments-in-lieu of dividends on Form 1099-MISC.<\/p>\n<p><strong>Paid<\/strong><\/p>\n<p>Short position holders borrow shares and are liable to the long holder for any distributions, including cash dividends.\u00a0 A cash debit will be processed as a payment in lieu (PIL) if the stock sold short pays a dividend. Payments in lieu paid on short positions may be tax deductible for U.S. taxpayers under certain circumstances.\u00a0 Please consult your tax advisor for more information.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The lender of dividend-paying shares is still entitled to the dividend payments. In the event that dividends are paid during the lend transaction, the borrower is responsible for paying the dividend amount to the lender. The lender receives this money as payment in lieu of the dividend. The tax treatment may be different than if the lender did not lend the shares and received the dividend directly.<\/p>\n","protected":false},"featured_media":0,"parent":0,"template":"","meta":{"_acf_changed":false,"footnotes":""},"traders-glossary":[13257,13251],"class_list":{"0":"post-180338","1":"glossary-terms","2":"type-glossary-terms","3":"status-publish","5":"traders-glossary-trading-terms-p","6":"traders-glossary-trading-alphabet"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Archives Term | IBKR Glossary | IBKR Campus<\/title>\n<meta name=\"description\" content=\"A Payment in Lieu, (PIL) refers to a cash credit or debit made to an account in recognition of a cash dividend paid to stockholders of the issuer.\" \/>\n<meta name=\"robots\" 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