Advanced Underwriting Consultants

Question of the Day – August 30

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question:  My client is purchasing a position in a commodities-based exchange traded fund (ETF).  What are the tax consequences of that investment?

Answer:  If commodities-based ETFs are sold at a profit, the treatment is not normal capital gains treatment.  ETFs, when liquidated at a gain, are taxed 60% long term capital gains and 40% short term gains—no matter how long the ETF itself has been held by the taxpayer.

Here’s an informative piece from Schwab describing how commodity-based ETFs are taxed.

Please follow link to view article on ‘What to Know About ETFs and Taxes’.

See pages 40 and 41 of IRS Publication 550 for more information about the taxation of ETFs.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.