Thanks to everyone who replied.

PMB

"dumbstruck" <dumbstruc[at]gmail.com> writes:

- quote -

I don't see why they are any more liable to do that than an open-end
funds investing in the same type of assets would be.

Anyhow, the "tax complications" are hardly complicated. If you
get a return of capital distribution (noted on 1099-DIV as a
"non-taxable distribution" which is *not* to be confused with
dividends allocable to tax-exempt interest), you report nothing
on your tax return and simply reduce your basis by the amount of
the ROC distribution. If your basis ever gets reduced to zero,
future ROC distributions go on your return as long-term capital
gains.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

dumbstruck wrote:
- quote -


Any investment where you receive a "return of capital" distribution will
require a cost basis adjustment. They're most common with investments
that have some depletion or depreciation aspect to their tax accounting,
like Master Limited Partnerships (eg energy-related trusts) or REITs.
I've seen them with open-end funds occasionally and I guess they could
happen with CEFs as well, but I don't think it's common, unless the fund
itself holds investments with depletion/depreciation.

-Tad

Aren't CEF's liable to messy tax complications due to sometimes
returning parts of your original capital in periodic distributions? I
thought they were notorious for notifying you of this right near the
april 15 tax deadline. Then maybe you have to adjust the basis on the
ultimate sale?

Paul Michael Brown wrote:
- quote -

Paul,
Yes that's the general rule - you add commissions to your purchase price
to determine the cost basis of your shares, and you look at your net
proceeds (net of commissions) when calculating gains or losses.

You said "fees" too...if you're talking about that small exchange fee
that's deducted at sale - you know, 8 cents, 20 cents, that kind of
amount - yes include that too to arrive at "net proceeds". But if it's a
fee paid to a broker/advisor in connection with the account, that's
treated differently, even if you hold only just the one ETF in the account.

-Tad

pmb[at]his.com (Paul Michael Brown) writes:

- quote -

You must, in fact.

- quote -

Depends (though you end up with the same answer). If the broker
reports net sales proceeds on 1099-B, that's the number you use
for proceeds. If the broker reports gross sales proceeds on
1099-B (does anyone do that anymore?), you again use the reported
proceeds but add sales-side commission & fees to basis.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

When I purchase a closed end ETF, may I include the brokerage comission
and fees in the basis?

When I sell the shares, may I deduct the brokerage comission and fees from
the proceeds when calculating the proceeds?