Tax question about gold ETF and T-bill

[PandaBear]

So I was looking at my E-Trade and Schwab 1099-B while doing taxes and this is the first year I bought GLDM and T-Bill, some interesting things I am not sure how do I enter them into TaxAct / FreeTaxUSA / TurboTax / H&R whatever. Just wondering how the professional investors among us file them. Thanks in advance:

1) So GLDM periodically sell their gold to pay for their cut of the management fee and I got something like $107 here and $256 there between different accounts. It is categorized as short term sales with cost basis missing and not reported to the IRS. I googled and found that those are supposedly my "trust management fee" and are not tax deductible. Does that mean I would just put down the same cost basis as proceed and just not deduct them off my investment cost in the 1040? or does that mean I have to pay income tax on the whole proceed (cost basis $0) not being able to deduct as investment cost?

2) I see that my short term T-Bill held to maturity being listed as both part of 1099-INT, as well as the transaction of maturing shown as a sales on the short term transactions for which basis is reported to the IRS. Obviously the proceed - cost - accrued market discount / wash sales net a 0 gain. Are the 1099-INT different bonds than the 1099-B market discount bond proceed? Are those market discount bond proceed having different state tax (instead of federal bonds being state income tax free)?

 

[csandste]

I'm not a CPA or AI and I don't spend the night at Holiday Inn Express. This is off the top of my head. I'm sure any AI app would give you better information. I got into SIVR the Aberdeen Silver ETF several years ago in my taxable account because it didn't pay dividends. After getting into it I discovered that when I sold it it didn't count as capital gains because even though it was an ETF it was treated as a collectable. I'm 81 and hanging on to it til I croak. The kids can inherit it at a new cost basis. I chose silver rather than gold because I thought it had secondary industrial uses. I guess the fact that it's locked up in a vault means its still a collectable. Made a lot of money on it in the last year however.

Don't even think this answers your question about management fees but if it's a precious metal I believe it's taxable at the full rate. I always assumed that the kept the thirty basis points for the expense ratio sitting around in cash, guess they could just pull some silver out and resell it and call that fund expenses. Thought that just lowered the return and didn't show up as a sale.

 

[PandaBear]

You are right about the "collectible" status in precious metal and I was fully aware of it before I enter this. What I didn't understand is, as the fund sell some part of it to pay for the "fees" would those be treated both as my sales without cost basis (since they weren't disclosed) so it would be my capital gain, and these fees not be tax deductible as investment expense.

 

[ArrestMeRedZ]

I don't know about GLDM, but Sprott structured PSLV (physical silver) to be just like any other stock fund. It's not treated like actual gold or silver and is not taxed at the collectable rate. Normal short or long term capital gains.

 

[csandste]

You are right about the "collectible" status in precious metal and I was fully aware of it before I enter this. What I didn't understand is, as the fund sell some part of it to pay for the "fees" would those be treated both as my sales without cost basis (since they weren't disclosed) so it would be my capital gain, and these fees not be tax deductible as investment expense.

Wouldn't this be the same as any other investment? I get my 1099 from Schwab and plug the numbers into FreeTax. Always assumed that costs were baked into the returns. If a fund charged 10 basis points it's return would be 19.9% instead of 20%. The cost would be built into the returns so you'd be paying a lower tax then if there was no operating expenses.

 

[Boomer]

Why I have a CPA do my taxes!

 

[PandaBear]

Wouldn't this be the same as any other investment? I get my 1099 from Schwab and plug the numbers into FreeTax. Always assumed that costs were baked into the returns. If a fund charged 10 basis points it's return would be 19.9% instead of 20%. The cost would be built into the returns so you'd be paying a lower tax then if there was no operating expenses.

The part about it is they do have a table of proceed and fee then cancel out to be zero, yet on the 1099B they have a sales but no cost basis.

 

[csandste]

Yes, this is true. The difference in tax treatment between SIVR (abrdn Physical Silver Shares ETF) and PSLV (Sprott Physical Silver Trust) stems from their different legal structures and how they are classified by the IRS. [1, 2, 3, 4]

Why the Difference?​

• SIVR (Grantor Trust): SIVR is structured as a grantor trust. For tax purposes, the IRS "looks through" this structure, treating shareholders as if they directly own the underlying silver. Since the IRS classifies physical precious metals as collectibles, long-term gains on SIVR are taxed at a maximum rate of 28%.
• PSLV (PFIC): PSLV is a Canadian closed-end trust classified as a Passive Foreign Investment Company (PFIC). While PFICs often have punitive tax rules, U.S. investors can make a Qualified Electing Fund (QEF) election (by filing IRS Form 8621). This election allows long-term gains to be taxed at the standard capital gains rates of 15% or 20%, effectively bypassing the 28% collectibles rate. [1, 2, 5, 6, 7, 8, 9, 10]

Comparison of Tax Treatments​

Asset Class	Collectible	Securities / Capital Asset
LT Capital Gains Rate	Up to 28%	15% or 20%
ST Capital Gains Rate	Ordinary Income	Ordinary Income
Tax Filing	Standard 1099-B	Requires IRS Form 8621

[th]

Feature [1, 2, 5, 8, 10, 11, 12]​

[/th][th]

SIVR (Grantor Trust)​

[/th][th]

PSLV (PFIC with QEF Election)​

[/th]​

Note: If a PSLV investor fails to make the timely QEF election, they may face much higher "excess distribution" taxes rather than the favorable capital gains rates. [13, 14, 15]
Would you like to know more about how to file the QEF election for PSLV or how these rates change if held in an IRA?

[1] https://sprott.com
[2] https://www.accountingtoday.com
[3] https://www.youtube.com
[4] https://southcoastfp.com
[5] https://sprott.com
[6] https://www.sec.gov
[7] https://www.ishares.com
[8] https://vipwealthadvisors.com
[9] https://sprott.com
[10] https://sprott.com
[11] https://www.kiplinger.com
[12] https://www.youtube.com
[13] https://www.forbes.com
[14] https://www.irsstreamlinedprocedures.com
[15] https://www.grayscale.com

 

[csandste]

Thanks to Gemini for that one. Rode it up, I can ride it down and give it to the kids when I die. Still doesn't answer the OP. At least I don't have to worry about a missed QEF election.

 

[csandste]

Why I have a CPA do my taxes!

That would be no fun.

 

[csandste]

The part about it is they do have a table of proceed and fee then cancel out to be zero, yet on the 1099B they have a sales but no cost basis.

Remember an article years ago where they put identical data into all the major tax programs and they were all different. Why don't you ask two different AI apps this question in case one is hallucinating and just file. I think it's zero but what do I know? No one left working at the IRS anyway.

 

[zzyzzx]

I just do the whole TurboTax import data from Schwab and let them worry about where to put the information on the form.