Retirement tax questions

Calculating Fee Gains/Losses and Cost Basis of GLD Shares:

[Update: See all my posts below as well as this one.  There are calculators at costbasistools dot com that you can use (I trust it, but cannot vouch for it 100% without being able to see all data entered etc.), but you have to know how to report the information.  And you have to enter each lot separately. The following can be used where there is no calculator at the moment for GBTC for example.]

It took me a long time to work through the details of this, so I'm sharing this out of sheer sympathy!  I would assume the same sort of process is required for SLV, but I did not check it directly. 

Reference: https://www.spdrgoldshares.com/media/GLD/file/SPDR-Gold-Trust-Tax-Information-2020.pdf

If you read the document for GLD 2020 Tax year, you cannot deduct the expenses from your taxes; you have to adjust your cost basis by the cost basis of the gold sold by the fund for your given number of shares.  "Although Trust expenses are not deductible for U.S. federal income tax purposes in 2020 Trust expenses are factors used to calculate each shareholders tax basis."  The value of the fund goes down due to the fees, so you have to lower your cost basis as well. 

1. When you go from month to month (and I'll give you an example to make this clear), you adjust the cost basis EACH MONTH by the COST BASIS (NOT the value) of the underlying gold sold to cover the fund's expenses.  Your share number stays the same (we are assuming no dividend reinvestment).  What changes is the cost basis of the shares you hold adjusted ONLY for the cost basis of the gold sold to generate fees.  
2. Set up an Excel Spreadsheet. From left to right enter ("/" means a separate column):
Date / Proceeds (1d on 1099-B) / Cost Basis Factor (from 1099-B; righthand column called "Additional Information") / 
Calculated Cost Basis of gold sold for fees = [Total Cost Basis of All Shares at end of Prior Period X Cost Basis Factor] / Loss or Gain on Shares = [Proceeds (1d) - Cost Basis of gold sold for fees] / New Adjusted Basis = [Prior Total Share Cost Basis - Cost Basis of Gold Sold for fees].  Follow these formulas exactly or you'll get lost.  😉

NOTE: GOLD is sold by the fund and they are telling you how much.  They do not take SHARES from you.  The value of the shares goes down as they take the fees off each month.  They sell gold to get their fees in currency.   

To repeat in a different way.  Start with your last Total share cost basis prior to new fees.  Calculate the cost basis of shares sold (see formula above).  Subtract that from the Proceeds to see if there is a gain or loss and add up all the monthly gains and losses to determine what gain or loss you need to report.  You can report them on the same line if they are all long term or all short term.  For each month, subtract the cost basis of gold sold for fees from the prior cost basis to use for the next month's calculation.   Each month's starting cost basis is LOWERED by the cost basis of the gold sold for fees, not by the "Proceeds" number. 

Say you bought GLD on Nov.30th, so you only have to account for two months of fees.  The math would look like this: (the cost basis numbers were removed by this website and they were 

and

3. What you have is a continual tally from Day 1 of your GLD buy of your shrinking cost basis.  If the gold price never changed, you'd lose the fees until you owned no gold in the end.  Nice business!  Note that the cost basis of all the shares held is adjusted (2nd column from right) by the amount of the cost basis of the given month's fee cost basis in the 4th column from the left.  The gain or loss is separately tallied in the 5th column from the left.  

4. See Step 4 on page 12 of the PDF.  It says that if the proceeds exceed the cost basis, you have a "reportable  gain."  It would be a short (365 days or less - count starts with next day after purchase as day 1) or long term gain (366 days or more) depending on when the shares were purchased.  Short term gains are taxed at regular income tax rates.  If long term, it has to be reported as a collectible sale (there is a box to check in the tax software) as gold gains are taxed at the higher collectable rate of 28%.  This seems strange that we're expected to pay taxes on a gain when the money is going to fees, but as one of the other posters here said, the federal government doesn't care what you do with a capital gain. They still tax it.  The law is obviously written badly, probably purposefully so, as most other ETFs account for their costs by adjusting the ETF price, which lowers your gain. 

I hope that helps!