Profits From Gold ETF’s May Result In A Higher Tax Bill From The IRS

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December 1, 2009 4:41pm ETF BASIC NEWS NYSE:GLD

taxman“Investors in some exchange traded funds might be getting a little something extra this year: a bigger tax bill. Profits from the vast majority


 of mutual funds get taxed at capital gains rates, just as profits from stocks and bonds. Long-term capital gains are taxed at a maximum 15%,” John Waggoner Reports From Industrial Lasers.

“But long-term profits from funds that invest in gold or silver bullion are taxed at the same rate as gains from gold bars and other collectibles: 28%.  Stocks, mutual funds and collectibles must be held for a year or more to qualify for long-term rates. Otherwise, they’re taxed as income at the same rate as wages — a maximum 35%,” Waggoner Reports.

“The logic: Fund profits get taxed at the same rate as the underlying investment. Just as gains from stock funds are treated the same as profits from the stocks themselves, profits from exotic ETFs are taxed the same as their investments,” Waggoner Reports.

“The higher tax rates might come as a shock to investors in funds that buy and sell bullion, such as the iShares Comex Gold Trust (IAU), SPDR Gold Shares (GLD), iShares Silver Trust (SLV), ETFS Physical Silver Trust (SIVR) and ETFS Physical Gold Trust (SGOL). Bullion ETFs have been wildly popular as the price of gold has soared. SPDR Gold (GLD), for example, has seen its assets soar to $35 billion at the end of October from $17.6 billion a year earlier,” Waggoner Reports.

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