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How do I report taxes for GBTC, ETHE, and other grantor trust fund investments?

For federal income tax purposes, you might hold certain funds in your Wealthfront account which are considered “grantor trusts”. You’ll need to take a few extra steps to calculate your adjusted cost basis for these investments and then report them on your taxes. This is because the income from the trust is taxed to the grantor, and not the trust itself. In this structure, you’re treated as owning the underlying assets directly. So the income taxes from the trust “flow through” to you, the Shareholder. Don’t worry though — we can help you calculate the numbers to report.

Funds that need special tax reporting

Ticker

Fund Name

CUSIP

EIN

Calculator

GBTC

GRAYSCALE BITCOIN TRUST

389637109

46-7019388

Download the GBTC Calculator

ETHE

GRAYSCALE ETHEREUM TRUST

389638107

82-6677805

Download the ETHE Calculator

GLD

SPDR GOLD

78463V107

81-6124035

Download the GLD Calculator

GLTR

ABERDEEN PRECIOUS METALS

003263100

27-2780046

Download GLTR Calculator

SLV

ISHARES SILVER

46428Q109

13-7474456

Download the SLV Calculator

PPLT

ABERDEEN PLATINUM

003260106

26-4732885

Download PPLT Calculator

PALL

ABERDEEN PALLADIUM

003262102

26-4733157

Download PALL Calculator

SGOL

ABERDEEN GOLD

00326A104

26-4587209

Download SGOL Calculator

GLDM

WORLD GOLD

98149E204

61-6588857

Download GLDM Calculator

IAU & IAU (former)

ISHARES GOLD

464285204 & 464285105

81-6124036

Download the IAU Calculator


What do I need to do to correctly calculate and report the adjusted cost basis and gain/loss on my taxes?

The grantor trust funds held in your Wealthfront account require some adjustments to your cost basis to account for underlying assets sold during the year. When filing your taxes, you need to report the underlying asset sales, which will use a different cost basis number than the one reported on your Form 1099. We’ll help you calculate the numbers. You’ll use the info from your Consolidated Form 1099 and use our calculators (with step-by-step instructions) to get the adjusted cost basis. We realize this is inconvenient, and we're doing our best to make it as easy for you as we can. You can also check out this video where we go through the process step-by-step of calculating your cost basis and importing to TurboTax.

Why does holding a grantor trust fund affect filing my taxes? 

Similar to ETFs, we simply track the purchase price of the grantor trust investments that you hold and report them to you on Form 1099-B. Calculating the cost basis is more complicated for a grantor trust because you’re treated as owning the underlying assets directly. When the grantor trusts provide us information related to the income, expenses, and credits applicable to the interest you hold after year-end, we’ll give you those details so you can report them directly on your tax return.

Because the grantor trusts generally do not generate cash flow, they must sell a portion of their underlying assets to cover trust expenses. These sales will be reported by you on your tax return, and the cost basis for these sales will need to be computed for that purpose.  However, the grantor trusts publish on their websites tax statements in which they disclose these asset sales, which you can use to compute your taxes. You can use our calculators (see the chart above) to help you determine your cost basis.

This calculation is based on information reported to us by the grantor trusts, which are publicly available on their websites. We disclaim any responsibility and make no warranty or representation regarding the accuracy of information or calculations provided by the grantor trusts.

If you purchased interests in a grantor trust fund directly from Wealthfront, we’ll report the cost per share that you originally paid. Although we’re not required to report this amount on Form 1099-B, we do report it for you to make it easier to locate this info at tax time.

If you sold or redeemed an interest in a grantor trust during the tax year, the sales proceeds will be reported on your Form 1099-B. Because these funds are considered “non-covered”, you’ll need to keep track of and report the cost basis info on your Form 8949. Non-covered cost basis means that your brokerage firm is NOT responsible for reporting cost basis information to the IRS, and they’ll only report the sales information. For non-covered securities, you’re responsible for reporting cost basis information to the IRS when you file your taxes. If you don’t report your cost basis, the IRS considers your securities to have been sold at a 100% capital gain, which can result in a higher tax liability.

If you have any questions, please reach out to your tax advisor.

 

Links are provided as a convenience for informational purposes only. They do not constitute an endorsement or approval by Wealthfront of the accuracy of the information on these sites. Wealthfront bears no responsibility for the accuracy, legality or content of the external site or that of subsequent links. Contact the fund companies directly for answers to questions regarding its content. 

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