What is the proper way to adjust the cost basis for the SLV / GLD ETFs that are structured as trusts, and have monthly expenses that show up on your 1099-B?

[sgbloss]

Those penny transactions automatically imported. I didn't get any option whether I wanted to import them or not. So now that I have 12 of these transactions looking for the date acquired and cost basis. What's the easiest way to deal with this?

[sgbloss]

Yes I held for all of 2021. 

[sgbloss]

So do I delete these 12 transactions that are a total of $9?

[Jack100000]

I found the calculator at cost basis tools . com matched the results using the numbers TD Ameritrade provides upon further checking.  They don't have GBTC yet.  I would personally trust it for GLD and SLV.
(Updated 4-19-2023)

Again, to be clear you have to report:
1. The capital gain/loss due to metal (or bitcoin for GBTC) on each lot of GLD or SLV shares.  EACH of those trusts sells what they hold to pay themselves, as I explained a couple of years ago (see above).  The IRS expects you to declare a gain or loss on that expense!  Yes, seems twisted, but true.
2. You then adjust your total gold/silver/bitcoin held in the trust at the end of the year by the amount they spend on fees.  (You determine your starting amount on the DAY you bought each lot from the PDF they have on their site.)  
3. You also adjust your cost basis DOWN each year such that the eventual gain you report (if it goes up) will be greater or your loss will be less.  I explain how to calc. that below. 
4. You have to distinguish short vs. long term gains/losses if that applies.  If you are more than a year from the purchase of a lot, they are LT gains/losses.  Before then, they would be short term and that may occur in the middle of the year of course, if you bought that lot in June for ex.  
5. To be accurate, you also have to calculate the partial months at the start and finish if that applies.  If you buy a lot mid-month and sell it mid-month, that applies.  It will reduce the proceeds number and increase the amount of metal you own vs. holding it for all of the June you bought it and all of some future June. 

The explanation for all the above detail is spelled out for GBTC here (and should apply t o GLD/SLV too), but I am not an accountant and don't play one on TV.  😉   

https://grayscale.com/wp-content/uploads/2023/01/Grayscale-BTC-Annual-Reporting-12.31.22-Final.pdf

The spreadsheet model I shared previously in this thread works (see above).  But if you have to deal with an entire year, you can simply add all the gold sales (or silver etc.) to adjust the...

COST BASIS (=[gold amount sold (add up all the months) / prior gold amount owned before the fees] X prior Cost Basis (meaning at end of prior year for ex., not the original buy date) is the NEW adjusted dollar Cost Basis of what you own that you carry to the next year.

The dollar values of those sales (to get total PROCEEDS) you get by multiplying the SUM of the monthly numbers the ETF managers provide by the number of shares you hold in each lot. 

You do NOT adjust the cost basis by the proceeds directly as they are based on all sorts of different prices.  You have to know how much of your gold you "lost" in fees to adjust the cost basis (formula I just shared).

Each time period refers back to the end values for Cost Basis in dollars and the metal amount owned (GLD and SLV) or bitcoin owned (in GBTC) by you.  As they spend your "Stuff," your cost basis falls and fees generate losses or gains depending on whether the price is higher or lower than your cost basis. 

As I've said, I'm not an accountant and don't even play one on TV, so the above is only my best take on the information I have access to.  I believe it's right, but you can always check with an accountant or a tax person on this site to verify it further.   😉

[GeorgeM777]

As a follow-up to the prior post, while there were apparently no trust sale proceeds from SLV, there were as you noted in your post sales of the underlying assets to pay trust expenses.  These sales could result in a gain or loss and thus need to be reported.  For SLV, iShares prepared an excel spreadsheet which contains the Tax Reporting Statement, 2022 Gross Proceeds file, and an Example of how an investor in SLV can calculate their gain or loss.  You can find this document by entering 2022 SLV Grantor Trust Tax Reporting into a Google search bar and the first search item should be the document you need to access.  Use the tabs at the bottom to access the various documents. 

For GLD, here is the link to the Reporting Statement.  On page 11 are the steps to follow in order to calculate your gain or loss on the sale of gold to pay trust expenses.

Gold Trust Reporting Statement

@sgbloss

[Jack100000]

See czhang4 above

What you did appears to be correct, except for one error.  Sorry to have missed your question last year! 

From TD Am: "The cost basis allocation factor is the value of the assets sold divided by the total net asset
value of the trust. If you know your cost of the assets sold, use that to determine your gain/loss. Otherwise, determine your cost basis by multiplying your adjusted cost basis by the cost basis
allocation factor. For example, if your adjusted basis is $1,000 and the cost basis allocation factor is 0.005 your cost basis allocated to that sale is $1,000 * 0.005 or $5. If there are subsequent
sales of trust assets, your adjusted cost basis for the next sale is $995."

I don't believe you reduced your cost basis by the first sale BEFORE applying the next cost basis factor.  Each one of those CBFs applies only to the adjusted cost basis FOLLOWING the prior reduction in cost basis.  You can't just keep using your original cost basis.  You have to step it down month by month to use their system.   

It gets more complicated if you have long term vs. short term gains as I've covered, but your situation is pretty simple.  You pay for the metal sales as cap gains/losses and you adjust your cost basis down by the COST BASIS calculation for those gold sales NOT by the proceeds amounts.  

The above is IMO...consult an accountant if needed!  😉

[sgbloss]

How can I clear these records? They are not reported to the IRS and are for informational purposes only. I would like to keep my hair and this may seem simple to you, but it's driving me crazy!

[sgbloss]

And I do appreciate all of your assistance. I'll never buy and hold type of security ever again! It's been such a pain.

[Jack100000]

SEE craftindo  above.... He thought he could just subtract the proceeds from his cost basis or ignore it.  You can't.  You are claiming less of a gain or more of a loss if you don't adjust your cost basis properly.  

You can't just report the cost basis reduction as the proceeds, though you would put the cost basis adjustment where you indicate on that tax program.  The cost basis reduction is NOT arrived at using the proceeds number.  That's because your cost basis has nothing to do with the price of what the metal is NOW.  Your remaining cost basis is reflected by the fraction of your original gold you have left.  Say the amount of gold you have when you sell GLD is down by fees of 3% of your gold.  Then your cost basis is 97% of your original cost.  You have to calculate the cost basis of the gold/silver whatever sold using the formula I provide or use the ETF tax PDF examples to follow how to do it.

You also have to report the cap gain/loss from the sales of the gold (whatever it holds) each year.  That you get via Proceeds in USD - Cost Basis and report as long/short term gains or losses.   You may have both depending on how long you've held the ETFs.  I went over all that in prior posts.  

See the spreadsheet formula I shared two years ago.  It's accurate.  If you don't adjust the cost basis down, you'll be shorting Uncle Sam.  See the formulas and the examples on the ETF Tax PDFs I and others reference.  Lobby the ETF companies and brokers to provide more information.  I don't make the rules.  😉

Above is IMO... Standard Disclaimer:  Check with an accountant if needed. 

[sgbloss]

 Thank you for your response. These proceeds are an investment expense. And I am just not getting it. 

[Jack100000]

sgbloss  (just above)

You cannot deduct the inv. expense any longer. Not sure when that was done, but it may have been Trump who got rid of it.  See my other posts today and follow the examples I posted and the PDFs from the company.  

They sold your gold and you owe cap gains or have a loss on that which was sold.

That changes your cost basis by LOWERING it every time they do that, which means you have to adjust your cost basis with each sale.  That will reduce a loss you claim or increase your gain.  Sounds crazy, but those are the rules.  I don't like it either and have been talking to the brokers to work with or push the ETF managers to submit this tax info directly on the 1099 Bs! 

Above is IMO...  Consult an accountant if needed.  

[sgbloss]

If I go into each record and enter the cost, it's under a penny so it is a zero cost basis, I code it as Box B, short term non covered, the box is highlighted in red, but I can move to the next page but then what do I check? Wash sale, proceeds from collectibles, gain or loss is ordinary? Can I do it this way?

[Jack100000]

sgbloss  just above... 

I cannot see what you are doing, so I cannot answer your questions.  Your statements are too vague and frankly, I don't have time to do more than provide the "way" to reach the correct answer.  You have to do the work or hire someone obviously.  

If you have the TD Ameritrade cost basis factors (CBFs) on 1099-B (back not shared with IRS, but you are still responsible for what I described in the prior post)  you can use those CBFs as I showed on my spreadsheet in April 2021.  If not, you have to build your own spreadsheet or use the calculator at costbasistools.com for each lot you bought (for GLD and SLV).  I used the latter and it seems to be accurate for GLD and SLV. (Updated 4-19-2023 after rechecking the calculator vs. the TD numbers)

Above is IMO... Consult an accountant if needed.  

[sgbloss]

Okay, thanks for all your time and information provided. Appreciate it.

[sgbloss]

Thank you for providing the information and spreadsheet. I printed it out and will attempt this.