Widely Held Fixed Investment Trust (WHFIT)

[Zagros]

I bought and sold GLD in 2020.
1. in 1099B there a line for both transactions, as I expected.
2. in 1099B there is an additional transaction that has confused me.
The quantity is 0 but there is a value under the Proceed column and a value for "cost basis factor" under the Additional Information column.
3. There is an item in the "Fee and Expenses" for GLD showing the negative value of the proceed of the entry in 2.

1099B says GLD is a "widely held fixed investment trust (WHFIT)" security (note No. 15). in TT, this one has a "needs review" button and the only values are under the columns Date and Proceed. As 1099B says, I need to use the given "Cost Basis Factor" to calculate the cost basis for this transaction. According to note No.16 in the 1099B form,

[cost basis allocation factor] = [ value of the assets sold ] / [ total net asset of the trust]

I need to know, how do I get [ the total net asset of the trust].

I appreciate any help.

[fanfare · Accepted solution]

that's the value of your holdings on the date the confusing  transaction occurred 

[Zagros]

I got it; I think. I found the closing price of the GLD on the date of the confusing transaction. That gives me the value of my holding on that date. Dividing the proceed value to my holding gives the cost basis factor. This is very close to the given factor in 1099B. Thank you for your response.

In TT, there is a "needs review" button for that transaction, the only way to get rid of the button is to enter a value for the cost basis. I entered zero and TT accepted that, but that is not correct; is it? I did the following to calculate the cost basis for this transaction:

[Total Net Asset of the Trust] = [Proceed] / [Cost Basis Factor]
[Cost Basis] = [Total Net Asset of the Trust] / [No. of Shares Bought]

I appreciate your input.

[fanfare · Accepted solution]

Because the fee is relatively small your cost basis could be less than 50 cents or negligible, which rounds to zero.

If the fee is less than 50 cents you can drop those transactions from your return.

[wistful]

If you know the original cost, note 16 says you can multiply it by the cost basis factor to get the cost basis, then subtracting this from original cost would give the adjusted cost basis for the next transaction etc.  but wouldn't this differ from the amount using the total net assets of the fund because the total could have doubled e.g. since purchase?

Help!

[RobertB4444]

@wistful  If you buy one share of stock for a dollar and then it splits the basis is $0.50.  

If you sell one share and use one dollar for the basis on that sale then the basis on the remaining share is zero.  

So you are going to multiply the basis by the percentage of shares that you sold in this transaction.  If it doubled you should make sure that the percentage of shares that you have keeps that in mind.

[wistful]

I am really struggling with GLD although the amount involved is relatively small.  I bought 3 same-size lots of GLD in '21.  (In different months) I calculated the cost basis for each monthly disbursement.  I sold my 1st lot, bought in Jan, in Dec carefully calculating the amended cost basis of that lot.  Alas TT is adding the cost basis of the other 2 lots and subtracting that from my sale cost basis.  Is it possible to force TT to accept my numbers?  Or am I doing something completely wrong?

[wistful]

I understand.  But what happens if the share price goes up and the No. of shares is the same.  That should not affect the cost basis should it?

[GeorgeM777]

To follow-up on the comments from @RobertB4444, fluctuations in the share price do not affect cost basis.  Regarding adjusting your basis on the first sale of GLD, you can adjust your basis on the page in TurboTax where you elect to manually enter your trade information.  In TurboTax online, go to the Income & Expenses section, scroll down to the Stocks, Cryptocurrency, Mutual Funds, etc, subsection, select Start or Review, and then find the GLD transaction that you need to edit.

Regarding the sale of your GLD, there may have been GLD expenses you incurred while you held those shares which you eventually sold.  Those GLD expenses are miscellaneous itemized deductions, which are not deductible for U.S. federal income tax purposes by individuals in 2021.

Regarding the GLD that you currently own, the Trust issued a 2021 Reporting Statement to shareholders of record.  Pages 11 and 12 of that Reporting Statement provide a Step-by-Step analysis of a hypothetical shareholder who purchased GLD during 2021 and held the shares for the remainder of the year.  The analysis explains how to calculate the shareholder's adjusted gold held and cost basis.  

Here is a link to the GLD 2021 Reporting Statement.

2021 GLD Reporting Statement

@wistful

[wistful]

Thank you GeorgeM777, for an exceptionally useful answer.

[bumper6]

Thanks George. This is helpful but I don't understand what and how to edit the information I have and I am seeking some input on what to do. My wife and I have several entries on our 1099B's from Vanguard. In the section"proceeds from Broker and Barter exchange transactions" the numbers are reported as positive numbers in a column labeled "1d-proceeds & 6- reported gross or net". Cost basis factors are provided in a column labeled "additional information". I don't think I need the cost basis factors as it appears the numbers I need are already provided. Near the end of the 1099B, the same numbers show up in the fees and expenses section as negative (-) numbers. I imported my 1099B and these showed up in the income & expenses section as needing more information. My initial reaction was to ignore this and delete the entries since the numbers are small (4.83) and its a fee so dealing with this would be to my benefit and the IRS won't care. However the numbers my wife has are considerably larger. Since this appears to be a fee it seems like I could go to the stocks, mutual funds ect, sales reported, find the GLD transactions (all short term), edit this and enter then numbers as a fee in the interview process. then delete the other entries that need more information. However, in the 1099B section "proceeds from Broker and Barter exchange transactions", the directions are to report this information on form 8949 part I with box B checked or part II with box E checked. In that case I don't know what the basis would be. Any advice on this will be much appreciated.

[bumper6]

This website has what appears like some useful downloadable spreadsheets for GLD, GBTC and other similar things:

https://support.wealthfront.com/hc/en-us/articles/[phone number removed]2-How-do-I-report-taxes-for-...

[wistful]

Help, Please,

My brokerage statement electronically entered into Turbotax 2022 shows monthly distributions from GLD and SLV as "return of capital"  but TT is insisting it is missing some info.  It asks whether it's long or short term gain and I can't get past it.  

What do I do?

[JulieS]

Long or short term refers to how long you owned the asset before the return of capital payment. Long term is more than one year, short term is one year or less. 

You will need to review the transactions and select long term or short term for each based on how long you own it. 

Return of capital payments are not taxable, but they do reduce your basis (but not below zero) in the underlying investment. 

[wistful]

Thanks JulieS, but I applied a Gordian knot solution. I deleted these return of capital transactions from TT and that solved the problem.  I have all the details on my brokerage statement to get my cost basis when I eventually sell.

Frankly if I'd known about this I'd never have complicated my life by investing in these WHFITs.

What a nightmare.