Tax Return entries associated with Principal Payment amounts on 1099-B
TomYoung
I hold the Gold ETF (GLD) and have received a 1099B for this fund.
There are several small amounts listed on the Form called Principal
Payments.
Looking around at various tax guidance reports prepared by various
financial institutions I'm reading the following with reference to
these items:
"Widely Held Fixed Investment Trusts
(�WHFIT�)
These special reporting requirements for these securities will
create signifi cant diff erences between the amounts reported on tax
forms compared to what appeared in your monthly statements.
The primary reasons for that are as follows: (a) the income must be
reported in the gross amount, including any fees or expenses that
were deducted by the Trustee prior the distribution, and (b) the
income must be reported be based on the tax year and date it was
received by the Trustee (the �record date�) rather than when it
was paid to you (the �payment date�). These securities include
royalty trusts, commodity trusts, mortgage pools, HOLDRS trusts,
many unit investment trusts (UITs) and some exchange traded
funds (ETFs)."
and
"Commodity trusts � a type of �WHFIT�
These trusts frequently do not make any cash distributions to
investors, but simply hold gold or silver. However, if the trustee
sells part of that commodity to pay expenses, that results in Form
1099-B reporting to you to account for the sale and an off setting
expense amount that you will find in the �Federal Nonreportable�
section of your statement. Examples include iShares COMEX Gold
(IAU), iShares Silver (SLV) and SPDR Gold ETF (GLD)."
(I think the above is from the Wells Fargo tax guide, but all the
guides are using pretty much the same boilerplate.)
Anyway, here's the question(s):
It sounds to me like I need to list each of these small Principal
Payments on Schedule D, with no associated basis. Correct?
Since the "off setting expenses" mentioned above get reported in a
"Federal Nonreportable" section of the 1099B it sounds like they don't
go anywhere in the tax return. Correct?
TIA.
Tom Young
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Tom Healy CPA
> Hi all:
>
> I hold the Gold ETF (GLD) and have received a 1099B for this fund.
> There are several small amounts listed on the Form called Principal
> Payments.
>
> Looking around at various tax guidance reports prepared by various
> financial institutions I'm reading the following with reference to
> these items:
>
> "Widely Held Fixed Investment Trusts
> These special reporting requirements for these securities will
> create signifi cant diff erences between the amounts reported on tax
> forms compared to what appeared in your monthly statements.
> The primary reasons for that are as follows: (a) the income must be
> reported in the gross amount, including any fees or expenses that
> were deducted by the Trustee prior the distribution, and (b) the
> income must be reported be based on the tax year and date it was
> was paid to you (the payment date ). These securities include
> royalty trusts, commodity trusts, mortgage pools, HOLDRS trusts,
> many unit investment trusts (UITs) and some exchange traded
> funds (ETFs)."
>
> and
>
> These trusts frequently do not make any cash distributions to
> investors, but simply hold gold or silver. However, if the trustee
> sells part of that commodity to pay expenses, that results in Form
> 1099-B reporting to you to account for the sale and an off setting
> section of your statement. Examples include iShares COMEX Gold
> (IAU), iShares Silver (SLV) and SPDR Gold ETF (GLD)."
>
> (I think the above is from the Wells Fargo tax guide, but all the
> guides are using pretty much the same boilerplate.)
>
> Anyway, here's the question(s):
>
> It sounds to me like I need to list each of these small Principal
> Payments on Schedule D, with no associated basis. �Correct?
>
> Since the "off setting expenses" mentioned above get reported in a
> "Federal Nonreportable" section of the 1099B it sounds like they don't
> go anywhere in the tax return. �Correct?
>
> TIA.
>
> Tom Young
>
download a daily list of the amount of the metal each unit contains by
date and the amount sold each month to pay for expenses. This is the
first year that the brokers have had to report those individual sales;
they may or may not have the "correct" figures. You need to create a
spreadsheet for your specific holdings; you need to get the amount of
gold or silver you actually own. That gives you a basis for the metal.
>From the list I mentioned, you get the amount of the metal sold each
month (out to many decimal places). From your spreadsheet you figure
the cost of that amount of the metal; that's what is listed as the
cost on Schedule D. You'll find it is a lot of work for maybe $10-$20
of sales for the year, but the upshot is that unless the price of the
metal moved a lot between the time you bought it and the time you sold
it, you're probably looking at cost about equal to the sales price
(especially if you are rounding to the nearest $).
After doing that for a year, you may decide that these trusts should
be owned in retirement accounts where all of that rigmarole can be
avoided.
Technically the sales are used to pay for investment expenses, which
go on Schedule A, miscellaneous deductions. Most people don't get a
tax benefit from those. They are "nonreportable" because the IRS
doesn't require that the broker report them to the IRS; not that they
don't have a tax implication.
TomYoung
Thanks for the reply. Moving this investment to my ROTH sounds like a
very practical suggestion.
Tom Young
TomYoung
(http://www.spdrgoldshares.com/media/GLD/file/SPDR-Gold-Trust-Tax-
Information-2009.pdf) is the issue of holding period. I would
*think* the holding period would begin with your purchase of the ETF
shares and that original date (assuming only one purchase of GLD)
compared to the dates of gold sales by the ETF would determine the
"long-term/short-term" classification?
Tom Young
rei...@gmail.com
By luck (that is, a google search) I stumbled upon a web-based tool that will do 99% of the work for you. It can be found at
http://www.costbasistools.com/gold/GLD.php
You just need to enter an account (nick)name, the original purchase date, number of shares, and the cost basis (full amount, not per share, and included commissions), and the tool will generate all the numbers for you. What a relief! No need any more to try and generate a spreadsheet based on those pdf files that SPDR publishes each year. The tool goes back to year 2004, and ends at the previous tax year end (2015 right now). This is just awesome! Enjoy.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< ------------------------------------------------------- >>