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Re: Zeros for cash?

Posted: Thu Mar 29, 2018 11:41 am
by dualstow
barrett wrote:It looks like VSBSX has an expense ratio of .07%. I THINK that more or less offsets any hit you take by buying smaller lots of T-Bills. For example, when I bought some bills at Fidelity recently, the "list price" in their one-year bill area was 2.13%, but when I hit "depth of book" I ended up getting about 2.06% for my smaller lot (didn't have the $50,000 or $100,000 I needed to avoid that). One can see that actual yield right before hitting the execute trade button.
That could very well be, Barrett, that the expense ratio is even worse. Perhaps it's a "the devil you know" situation. Kind of a funny thing to say, coming from someone who buys at auction. O0 I suppose I could do it your way- buy secondary and know the yield. I guess I'm comfortable now, letting VSBSX do its thing, and just adding to it as my T-Bill rungs are redeemed. And, like Kriegs, I could always go back.

Re: Zeros for cash?

Posted: Thu Mar 29, 2018 4:29 pm
by Mr Vacuum
Kriegsspiel wrote:
Mr Vacuum wrote:The irony of a clear answer about precise tax treatment of 1 year tbills not yet appearing in this thread amongst analyzers and tweakers is a bit much considering they were Harry Browne’s clear and simple recommendation for one fourth or the portfolio ;)

Indeed, I previously switched from funds to bills in taxable thinking it would mean less capital gains to think about and report since i was not selling but holding to maturity (but apparently didn’t check for sure??). I’ve got some maturing in July, so I’ll see how Fidelity classifies the gains then.
Like I said, at Vanguard when the bill mature, $1,000 is deposited in your settlement fund. Then you buy another bill for $997 or whatever. When it matures, $1,000 in the settlement fund again. When Vanguard spits out your 1099 it will have added up all the interest for you. If you sell them Vanguard calculates your capital gains/loss. Are you guys saying something I'm not getting?
Sorry, Kriegs, I missed your post when I wrote that. Or else it didn't compute at first because you said the bills pay interest, while I'm looking at "ZERO CPN" thinking that can't be interest.

Looking at my Fidelity tax info in more detail, I can confirm zero cpn bills listed under "Interest on U.S. Treasury Bonds & Notes" but no capital gains, just as you describe. The bills were a mix of secondary market purchases and auction purchases with maturities of 6 months or less, all but a few held to maturity. Now what I'm not connecting is that even the few bills I sold don't list capital gains--that part doesn't add up.

Re: Zeros for cash?

Posted: Fri Mar 30, 2018 11:38 am
by barrett
Mr Vacuum wrote:Looking at my Fidelity tax info in more detail, I can confirm zero cpn bills listed under "Interest on U.S. Treasury Bonds & Notes" but no capital gains, just as you describe. The bills were a mix of secondary market purchases and auction purchases with maturities of 6 months or less, all but a few held to maturity. Now what I'm not connecting is that even the few bills I sold don't list capital gains--that part doesn't add up.
Not a tax expert at all but, I think you may be confusing interest income with capital gains. I believe the interest income on treasuries would be reported as 1099-INT income, and that the tax treatment on that income is dependent on your marginal tax rate for that particular year.

Do I have that right?