Normal margin rates are 5%+, I could see a big account getting a big discount, but 0.25%? At some point (well above 0.25%) it’s clear that a special rate is be

Normal margin rates are 5%+, I could see a big account getting a big discount, but 0.25%? At some point (well above 0.25%) it’s clear that a special rate is being offered that is no longer an arms length loan (IRS Part 1 Section 7872) and the imputed rate will be applied as if the difference is an interest payment from the bank to the customer. But let’s say the client gets 4% instead of the normal 5.5%. If they never pay it back it only takes a few years before they pay more in interest than they would have paid in capital gains taxes. It’s a “loophole” that nobody uses to avoid taxes for a lifetime.