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...and the prob is even more insideous when the lent security is an MLP or a REIT - the accounting becomes a freekin nightmare because you DON'T get a K-1 whim there is the PIL (payment in lieu. I'm trying to make the case that , absent an actual debit balance, they should not lend out...

That's the issue - I have NEVER BORROWed or had a debit bal. I use the margin for collateral (rather than cash) on naked short options but never have had a debit bal. The broker has "interpreted" the margin agreement to "mean" that is the same as a debit bal.

Has anyone seen any updates to this problem? My broker loaned a tax free ETF and offers NO compensation for me having to pay full on tax now.