GLD (Gold Trust ETF) tax reporting--My understanding

[JohnnyComeLately]

Hello, there are many threads on this site discussing the proper tax reporting for SPDR Gold Shares (GLD).  The threads focus on the confusing presence on the 1099-B for owners of GLD of "UNDETERMINED TERM TRANSACTIONS FOR NONCOVERED TAX LOTS" and ask what to do with this information on taxes.

The many threads here don't give a clear and convincing answer... they only added to my confusion.  Unsatisfied, I set out to learn the answer and offer it here.  What follows is based on the State Street "SPDR-Gold-Trust-Tax-Information-2025.pdf" document that can be downloaded from the State Street website.  That document is essential reading for anyone who owned GLD shares during 2025.  Please have a look at my brief explanation below, as well as the State Street document, and correct me if I make a mistake in this brief, partial explanation.

The reason shareholders of GLD have these "UNDETERMINED TERM TRANSACTIONS FOR NONCOVERED TAX LOTS" on 1099-B is that GLD sells gold during the year to pay expenses.  These sales pass through to each shareholder on a pro-rata basis, and this is the number that appears on your 1099-B under the "UNDETERMINED TERM TRANSACTIONS..." heading.  So, even if you did not sell any GLD shares during the year individually, the fund's sales of gold are reported to the IRS on 1099-B as your pro-rata share of the fund's sales...and your broker provides you with the dollar amount of your pro rata sales, leaving you to determine the cost to deduct from the proceeds to determine your taxable income or loss from GLD for the year.

You can determine your cost by using the example shown in State Street's "SPDR-Gold-Trust-Tax-Information-2025.pdf" document on pages 11 and 12, together with the data shown on earlier pages.  The document takes you through a 6-step procedure which is a little complicated but perfectly doable.  At the end of this procedure, you will not only have calculated your cost to deduct from the proceeds shown in 1099-B, but also you will have calculated your adjusted cost basis.  The cost basis must be adjusted downwards because GLD sold gold during the year to pay its expenses, and your ownership is affected by what was sold on a pro rata basis.  Over the life of your holding GLD, you will have to update your cost basis year after year to reflect these sales until the date that you sell those accursed GLD shares.

If you don't own many shares of GLD the labor involved in this tax reporting year to year, as well as the hassle of adjusting your cost basis year to year, may not be worth your effort.  The whole thing is indeed a royal pain, and one wishes brokers flashed us a warning screen telling us before we buy GLD and similar products that owning them may not be worth the trouble they cause us.  Alas, we find out too late and are sucked into this tax accounting vortex, never to emerge until we finally sell our own shares.

[Mike9241]

you are correct. 

most individual taxpayers can skip steps 2 and 5 because investment expenses aren't deductible

as for tracking, apps even spreadsheets, can help with your gain/loss and remaining tax basis and units. 

[JohnnyComeLately]

It is true that investment expenses per se are not deductible. But the dollars listed under the heading "UNDETERMINED TERM TRANSACTIONS FOR NONCOVERED TAX LOTS" on 1099-B are not "expenses" for tax reporting purposes.  Those dollars derive from SALES OF GOLD TO PAY FUND EXPENSES, not the expenses themselves.  Since they are bona fide sales for each GLD shareholder (on a pro rata basis), they get reported to IRS on 1099-B.  And this unusual reporting is why we have to go through this nightmare, as opposed to other fund types that pay their expenses without separately reporting sales of shares or whatever underlying asset they hold to the IRS.

If I'm understanding correctly, then no one should skip step 2 on the State Street document I reference because in step 2 you calculate your pro rata share of the gold (in ounces) sold to pay expenses.  The amount in sold in ounces will need to be deducted from the amount of ounces originally purchased to provide an accurate basis in ounces of gold that have been sold when GLD shares are finally disposed of.

As for the result of step 5, that number should exactly equal the total reported for the year on Schedule 1099-B under the heading "UNDETERMINED TERM TRANSACTIONS FOR NONCOVERED TAX LOTS" -- and as such it is one of the numbers you must report, along with the result of step 3, the total cost of gold sold.

In essence, for each year a person owns GLD, they must report the result of step 5 (which equals 1099-B) as the sales proceeds and the result of step 3 as the "cost basis" for the sales proceeds.  The difference between sales proceeds and "cost basis" equals the gain or loss for that year for tax reporting purposes.

This, at least, is my best understanding of it.

[chris_vandoren]

Note: Gains in GLD are taxed as a collectible, not a security.  Wild.

I've done the whole spreadsheet thing and calculated everything, but I'm not sure what to do with it. 

I have downloaded my 1099-B from my broker Charles Schwab with the missing cost info.  Do I change the data in the 1099-B to fix my missing cost in the sale?  ANd change the security to a collectible?  Or do I delete the incorrect 1099-B and enter it manually?  Or ignore it as the dollars are de minimis in my case ($525 in sales, $450 in cost of sales).

Thanks for any thoughts on this.

nb, my friend holds his GLD at Fidelity and he says they include the cost in their 1099-B!

[DaveF1006]

Yes, change the basis in the 1099-B to fix your missing cost in the sale and change the security to a collectible.  This assures the 28% gain on the sale will be applied.  

[user-1253]

how do I change the security to a collectable?  I'm using Premier/Mac.

[user-1253]

Note that If I try to set the sale to collectable by overriding column (f) Code(s) on form 8949, TurboTax generates an error saying: 

Form 8949 (Copy 2): Transaction Code (ST) should not be overridden and changed for

Electronic Filing. Using an override can prevent the cross-checking that's important to

an accurate tax return. To cancel the override, click on the overridden field and choose

'Override' from the Edit menu.

I expect this will prevent me from filing. Ugh.

[DianeW777]

Yes. Funds that invest in precious metals like gold and silver are treated like collectibles for U.S. tax purposes, which means long-term capital gains from those funds will be taxed at a top rate of 28%, compared with a maximum rate of 20% for stocks. Short term gains will be taxed at the ordinary or marginal tax rate for your situation.

• IRS Snapshot of Collectibles

Change the sale of your Gold Trust ETF by first deleting the sale entered as a security. 

Use the link below for your version of TurboTax to delete a form.

• If you're using TurboTax Online software and need to delete a form, click here.
• If you're using TurboTax Desktop software and need to delete a form, click here.

TurboTax can handle your collectible sale as you will see next.

To record your sale/redemption in TurboTax Desktop or TurboTax Online use the following steps:

1. Open your TurboTax Return > Search ( upper right) > type collectibles > Click the Jump to... link
2. Edit beside your Sale or Add Investments or Add more sales > Continue 
3. Enter the information about your sale on the screen 'Tell us about your 'Investment Firm' 1099-B'
4. Select the correct holding period covered or noncovered > Continue
5. On the 'any of these less common items on your 'Investment Firm' 1099-B?' select on Box 3 checkbox for collectibles > 
6. For TurboTax Online answer 'Yes' to 'Do these sales include any other types of investments?' (shows collectibles) > Under 'What type of investment did you sell? select Collectible
7. Enter any other information for this screen then select Done > Review the next screen and when finished select Continue
8. See the images below for assistance.

Note: Brokers are required to show 'noncovered' if they do not have the information about the cost basis or holding period. This happens usually for one of two reasons.  

1. The fund or stock was transferred to them from another broker and they don't have the history; or
2. It was held with them for longer than the IRS began to require this information from the broker. (The owner of the investment was always required to have this information in the past.

@user-1253 

[Amy105]

This website was lifesaver for calculating the numbers:

https://costbasistools.com/gold/gld.php

[Mikke]

I used AI (Gemini) for the calculations. Provided the pdf as input and asked to explain calculations as well. It did a great job.