Correction: Beware of Taxes with Currency, Precious Metal ETFs

By Matthew Hougan

CORRECTION: An earlier version of this blog regarding the taxation of currency ETFs was not correct.

The original post suggested that any gains on both currency ETNs and ETFs would be taxed at ordinary income rates. In fact, ETFs may qualify for long-term capital gains treatments.

Details forthcoming.

Comments

[Toeser:]

This will only be a concern for a few more months. Obama plans to tax the crap out of all gains, and currency ETF's will no longer be disadvantaged. I just wish I could meet all the people that will get my money.

2008 Aug 14 05:49 AM

[buyitcheap:]

LOL - keep investing and learning, and risking your personal capital Toeser. there are a lot of handouts depending on you!

2008 Aug 14 06:55 AM

[User 86999:]

It will be worth mentioning the nightmare taxation associated with "partnership" status of some of the funds such as DBC, the currency basket and whole lot more inside or outside of currency asset class that generate K-1 forms. Those forms contain some phantom incomes that you've never seen but are required by IRS to pay taxes on, because the "partnership" made that money. Bizarre. Yahoo forums contain numerous threads on that aspect. It is sad that there is no authoritative article on SA to address that issue.

2008 Aug 14 09:25 AM

[User 211108:]

Matthew, are you per chance an attorney or CPA? I am not, but seem to recollect that the 28% tax rate is for collectible gold and silver coins and is different than for bullion held in an ETF. Is there anyone out there from the IRS or an attorney, or CPA who might clarify that issue. If it is indeed true that the 28% rate is applicable to GLD and SLV it would adversely impact interest in investing in those funds, would it not.

2008 Aug 14 10:27 AM

[Indexor:]

User 211108:

I am neither an attorney or CPA but the 28% tax rate for ANY holding period is correct. I suggest you contact State Street Global Advisors who provide the SPDR Gold Shares (GLD) at 1-866-787-2257 or iShares who provide the COMEX Gold Trust (IAU) at 1-800-474-2737. They will verify the 28% rate. You could also telephone or visit your local IRS office and they will verify the 28% rate. You could also contact a local CPA or tax attorney for their verification.

2008 Aug 14 11:28 AM

[JBP:]

Obama has mentioned 25% on long term capital gains, so 28% will be right in line...

2008 Aug 14 12:03 PM

[copesetic:]

yet another reason to "invest" in physical bullion.

2008 Aug 14 02:25 PM

[Emerald:]

For those of you who are intent on sprouting political commentary on taxes, please don't forget the stealth taxes due to massive government borrowing and the debasing of the currency. This is a far greater "tax" on our standard of living than a potential 5% increase in ordinary or capital gains taxes. If our country returns to a stable financial footing, we all make and keep more. That's the real analysis.

2008 Aug 18 11:34 AM

[fran:]

doesn't anyone read a prospectus[time to address tax consequence is now. READ and ASK!] before investing? perhaps less time on SA/others and more time with J. K. LASSER?

2008 Aug 18 01:21 PM