Your Commodity ETF Tax Questions Answered
What is a Schedule K-1?
Commodity fund investors have started receiving their Schedule K-1s in the mail recently, so we thought it would be a good time to review the pros and cons of the various exchange-traded fund structures from a tax perspective. Also, we'll discuss some of the issues to which investors will need to pay attention when they are preparing their 2009 tax returns.
Most investors are familiar with Form 1099 that accompanies many "1940 Act" funds (traditional mutual funds that hold equities). However, if you bought a commodity-futures-based ETF, you might have received a Schedule K-1 instead. While the form may be intimidating at first, it should not be perceived as a tax nightmare. We'll help you walk through the filing process later in the article.
Paul Justice does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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