Gyroscopic Investing

Posted: **Sun Apr 10, 2011 9:51 am**

Just to check with y'all, in case you held some gold ETF in a taxable account...

This is for some GLD I bought in December 2009 and sold in May 2010. I bought exactly $2500 worth of gold.
On my form 1099-B I have these lines:

Code: Select all

01/07/10 0.76 0.00 Principal payment  0.000326234 Cost Basis Allocation Factor
02/03/10 0.75 0.00 Principal payment  0.000328382 Cost Basis Allocation Factor
03/03/10 0.65 0.00 Principal payment  0.000277013 Cost Basis Allocation Factor
04/08/10 0.73 0.00 Principal payment  0.000308559 Cost Basis Allocation Factor
05/07/10 0.69 0.00 Principal payment  0.000280452 Cost Basis Allocation Factor

So, for each month I owned GLD it lists the percentage of gold they sold to cover there costs. So what I did in Excel is...

Code: Select all

Alloc Factor	Cost	My Basis
0.000326234	2500	0.815585
0.000328382	2500	0.820955
0.000277013	2500	0.6925325
0.000308559	2500	0.7713975
0.000280452	2500	0.70113

I multiplied the allocation factor with my cost basis to calculate the cost basis for my part of this "sale". So for January my cost basis was $0.82, they sold for $0.76. February, cost basis $0.82, sold for $0.75, etc. Then, when entering it in my tax software, I also have to mark it as Special Type: Collectible.

Does this make sense?
BTW. do I really need to enter all these dollar sales???

Posted: **Sun Apr 10, 2011 6:27 pm**

I think you might be doing it wrong. I have GLD and SLV in my brokerage account. I get a statement from Fidelity telling me my investment expenses for each one. The totals are just a few dollars for the whole year. What you are allowed to do is write these off as investment expenses, not income. This is basically the cost for storing your gold.

It comes in two sections:

1099B - Proceeds from Broker and Barter Exchange Transactions

ETFS GOLD TR SHS
0.000 PRINCIPAL 09/02/10 2.62 0.00
0.000 PRINCIPAL 10/05/10 2.81 0.00
0.000 PRINCIPAL 11/02/10 5.19 0.00
0.000 PRINCIPAL 12/02/10 4.92 0.00

and "Proceeds Investment Expenses"

wrote:ETFS GOLD TR SHS
09/02/10 2.62-
10/05/10 2.81-
11/02/10 5.19-
12/02/10 4.92-
Total 15.54-

Posted: **Sun Apr 10, 2011 6:34 pm**

And no, even though TurboTax itemized all of these tiny expenses for me by downloading my statement directly from Fidelity, unless you have a ton of deductions from running a home business or something, chances are you aren't over the $7500 or whatever it is standard deduction, so you end up not using them anyway.

Disclaimer: I'm not an accountant or tax attorney so please don't take my word for it.

Posted: **Tue Apr 12, 2011 11:21 am**

Somewhere I seem to have read that because GLD sells some of the gold to get their expenses, that sale has to be reported by whoever owns GLD, proportionally. So on the one hand I report my part of the profits on that sale, as above. On the other hand, I can claim whatever they charged as an investment expense, which you mentioned. But who knows? Anyways... my taxes have been efiled already...

I'll probably sell my taxable GLD in December, just so I don't have to do this again the year after next

Gyroscopic Investing

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