When Is A Stock Not a Stock? Tax Issues to Understand Before December 31
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When Is A Stock Not a Stock? Tax Issues to Understand Before December 31 Hi Everyone, It is very important to understand that every investment you can purchase from a brokerage that has a ticker symbol is not necessarily regular common stock. It is important to understand this because different types of investments require different tax accounting. bivio provides your club partnership tax accounting for investments in common stock and ETF's and mutual funds which are made up of common stock. It does not provide you with the tax accounting you need if, for example, you own gold bullion. How might that happen? There is a commodity ETF with ticker GLD that is very popular right now. If you own this, you do not actually own shares in a company, you own gold bullion. Here is a description of the calculations you need to do to report the income from this investment each year. http://www.spdrgoldshares.com/media/GLD/file/SPDR-Gold-Trust-Tax-Information-2009.pdf Income from GLD is even taxed at a different long term capital gains rate than long term capital gains from stocks. Gold is considered a collectible and is taxed at a 28% long term rate. Long term capital gains from stocks are taxed at a maximum rate of 15%. Another category of investment where shares trade with a ticker but are not stock are Master Limited Partnerships. They also bring along a specialized set of accounting and taxation requirements which bivio services do not provide. A brief list of some of the specific investments that will cause accounting and tax issues for your club can be found on our "Before You Invest" page at http://www.bivio.com/hn/investments-Tax-Accounting-REIT-MLP-ETF.html This list is not all inclusive, if you have any questions, we're always glad to check into a specific investment before you purchase it. Add into the mix the fact that in a club setting you have to overlay partnership accounting requirements on top of this complex tax information you will not even find out until far into the tax season. We reiterate again that you do not want to hold these types of investments in your investment club. If you have purchased them, we are reminding you to consider selling them before the end of this calendar year. You will already have a headache when it's time to prepare your 2010 taxes. However, if you sell them now, you won't have the same issues to deal with next year. -- Laurie Frederiksen Invest with your friends! www.bivio.com Become our Facebook friend! www.facebook.com/bivio Follow us on twitter! www.twitter.com/bivio Thanks for the info, Laurie. This is the very reason we don't buy MLPs in our club. By the way, SLV is an iShares ETF that is backed by physical silver bullion held by J.P.Morgan in a bank vault in London. It's very popular now, too, and it will fall into the category you describe.
Lynn Ostrem
Dear Laurie: Our Club is about to purchase shares in American Capital Agency (AGNC), a REIT firm. Before we do, I want to be sure that Bivio can handle this specific equity when it prepares the Club Tax Return. Please advise. Thanks for the continued outstanding support!! Best regards, Leo -----Original Message----- From: club_cafe@bivio.com [mailto:club_cafe@bivio.com] On Behalf Of Laurie Frederiksen Sent: Saturday, December 11, 2010 2:57 PM To: The Club Cafe Subject: club_cafe: When Is A Stock Not a Stock? Tax Issues to Understand Before December 31 Hi Everyone, It is very important to understand that every investment you can purchase from a brokerage that has a ticker symbol is not necessarily regular common stock. It is important to understand this because different types of investments require different tax accounting. bivio provides your club partnership tax accounting for investments in common stock and ETF's and mutual funds which are made up of common stock. It does not provide you with the tax accounting you need if, for example, you own gold bullion. How might that happen? There is a commodity ETF with ticker GLD that is very popular right now. If you own this, you do not actually own shares in a company, you own gold bullion. Here is a description of the calculations you need to do to report the income from this investment each year. http://www.spdrgoldshares.com/media/GLD/file/SPDR-Gold-Trust-Tax-Information -2009.pdf Income from GLD is even taxed at a different long term capital gains rate than long term capital gains from stocks. Gold is considered a collectible and is taxed at a 28% long term rate. Long term capital gains from stocks are taxed at a maximum rate of 15%. Another category of investment where shares trade with a ticker but are not stock are Master Limited Partnerships. They also bring along a specialized set of accounting and taxation requirements which bivio services do not provide. A brief list of some of the specific investments that will cause accounting and tax issues for your club can be found on our "Before You Invest" page at http://www.bivio.com/hn/investments-Tax-Accounting-REIT-MLP-ETF.html This list is not all inclusive, if you have any questions, we're always glad to check into a specific investment before you purchase it. Add into the mix the fact that in a club setting you have to overlay partnership accounting requirements on top of this complex tax information you will not even find out until far into the tax season. We reiterate again that you do not want to hold these types of investments in your investment club. If you have purchased them, we are reminding you to consider selling them before the end of this calendar year. You will already have a headache when it's time to prepare your 2010 taxes. However, if you sell them now, you won't have the same issues to deal with next year. -- Laurie Frederiksen Invest with your friends! www.bivio.com Become our Facebook friend! www.facebook.com/bivio Follow us on twitter! www.twitter.com/bivio Our club bought Crosstex (XTEX) in October, not realizing it's a partnership. Should we sell before the end of 2010? Laurie Frederiksen wrote: > Hi Everyone, > > It is very important to understand that every investment you can > purchase from a brokerage that has a ticker symbol is not necessarily > regular common stock. It is important to understand this because > different types of investments require different tax accounting. > bivio provides your club partnership tax accounting for investments in > common stock and ETF's and mutual funds which are made up of common > stock. It does not provide you with the tax accounting you need if, > for example, you own gold bullion. > > How might that happen? There is a commodity ETF with ticker GLD that > is very popular right now. If you own this, you do not actually own > shares in a company, you own gold bullion. Here is a description of > the calculations you need to do to report the income from this > investment each year. > > http://www.spdrgoldshares.com/media/GLD/file/SPDR-Gold-Trust-Tax-Information-2009.pdf > > Income from GLD is even taxed at a different long term capital gains > rate than long term capital gains from stocks. Gold is considered a > collectible and is taxed at a 28% long term rate. Long term capital > gains from stocks are taxed at a maximum rate of 15%. > > Another category of investment where shares trade with a ticker but > are not stock are Master Limited Partnerships. They also bring along > a specialized set of accounting and taxation requirements which bivio > services do not provide. > > A brief list of some of the specific investments that will cause > accounting and tax issues for your club can be found on our "Before > You Invest" page at > http://www.bivio.com/hn/investments-Tax-Accounting-REIT-MLP-ETF.html > > This list is not all inclusive, if you have any questions, we're > always glad to check into a specific investment before you purchase > it. > > Add into the mix the fact that in a club setting you have to overlay > partnership accounting requirements on top of this complex tax > information you will not even find out until far into the tax season. > We reiterate again that you do not want to hold these types of > investments in your investment club. > > If you have purchased them, we are reminding you to consider selling > them before the end of this calendar year. You will already have a > headache when it's time to prepare your 2010 taxes. However, if you > sell them now, you won't have the same issues to deal with next year. > > -- > Laurie Frederiksen > Invest with your friends! > www.bivio.com > > Become our Facebook friend! www.facebook.com/bivio > Follow us on twitter! www.twitter.com/bivio |
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