Exchange Traded Funds (ETFs)

[PLYCPA]

I am just becoming familiar with ETFs as a new client invests in them. My research so far indicates that the transactions for these funds would be taxed under the same rules as other individual security buy/sell transactions. I did note the tax planning thread posted in March 2006. Am I correct that there are no special rules regarding the reporting of ETF sale transactions? Does anyone have suggestions regarding other sources which address the taxation of ETF transactions?

Thanks for the help from a new member.

[PLYCPA]

Exchange Traded Funds (ETFs)

This is a duplicate thread. Sorry.

[Bees Knees]

I have never heard of ETFs before, so I did a google search and found this at Wikipedia:

http://en.wikipedia.org/wiki/Exchange-traded_fund

Taxation
ETFs are structured for tax efficiency and can be more attractive than mutual funds. In the U.S., whenever a mutual fund realizes a capital gain that is not balanced by a realized loss, the mutual fund must distribute the capital gains to its shareholders. This can happen whenever the mutual fund sells portfolio securities, whether to reallocate its investments or to fund shareholder redemptions. These gains are taxable to all shareholders, even those who reinvest the gains distributions in more shares of the fund. In contrast, ETFs are not redeemed by holders (instead, holders simply sell their ETF shares on the stock market, as they would a stock, or effect a non-taxable redemption of a creation unit for portfolio securities), so that investors generally only realize capital gains when they sell their own shares or when the ETF trades to reflect changes in the underlying index.[4] In most cases, ETFs are more tax-efficient than conventional mutual funds in the same asset classes or categories.[37]

It may or may not be true, but it sounds logical to me.

[DaveO]

Fyi

I've invested in a few ETF's and one of them sent me a K-1 so it was organized as a partnership. You might want to be on the lookout for a K-1.

[erchess]

Exchange Traded Funds

My father is a short term trader who invests in and out of four ETFs. One tracks the price of Gold, one the price of Silver, one the DOW and one double the inverse of the DOW. All succeed in what they are set up to do and Dad seems to be able to predict their major moves much of the time and how to stay out of them at other times.