Expense of precious metal ETFs and tax implications
Expense of precious metal ETFs and tax implications
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ToniAz · External communityPost link
External question — Personal Finance Stack Exchange
Author: ToniAz
Original post: https://money.stackexchange.com/questions/137751
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
Adaptation: HTML converted to plain text; contact email addresses removed.
I am trying to understand how precious metal ETFs actually collect their fees. I know that for a stock ETF, expenses are collected by charging the shareholder's brokerage account a cash amount on a periodic basis. This does not seem to be the case for precious metal ETFs. It appears that a very tiny fractional share is sold on the shareholder's behalf on a monthly basis. Tax documents mark this transaction in 2 places:
As a "Gross proceeds investment expense" in the "Fees and Expenses" section
As a "Principal payment" in the "Proceeds from Broker and Barter Exchange Transactions" section
I have a few questions:
Why doesn't a precious metal ETF just charge the shareholder's brokerage account directly instead of selling their shares?
If #1 is not odd enough, why does the shareholder have to pay tax on the "gross proceeds" from an "investment expense" via "principal payment"? This sounds like having to pay taxes on an electric bill.
Can these transactions/expenses be lumped into a single transaction when filing taxes, or do they have to go into separate transactions, one for every month the ETF is held?
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Quoted from Forex.com.bd-Editorial External question — Personal Finance Stack Exchange Author: ToniAz Source score (net votes, not local likes): 0 Original post: https://money.stackexchange.com/questions/137751 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. I am trying to understand how precious metal ETFs actually collect their fees. I know that for a stock ETF, expenses are collected by charging the shareholder's brokerage account a cash amount on a periodic basis. This does not seem to be the case for precious metal ETFs. It appears that a very tiny fractional share is sold on the shareholder's behalf on a monthly basis. Tax documents mark this transaction in 2 places: As a "Gross proceeds investment expense" in the "Fees and Expenses" section As a "Principal payment" in the "Proceeds from Broker and Barter Exchange Transactions" section I have a few questions: Why doesn't a precious metal ETF just charge the shareholder's brokerage account directly instead of selling their shares? If #1 is not odd enough, why does the shareholder have to pay tax on the "gross proceeds" from an "investment expense" via "principal payment"? This sounds like having to pay taxes on an electric bill. Can these transactions/expenses be lumped into a single transaction when filing taxes, or do they have to go into separate transactions, one for every month the ETF is held?
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