Taxation…one of the most ill-favored and complicated topics. However you have to know what you will get after taxes cause it means a lot. One side is the ETF, ETN, mutual fund or any other simple or not instrument performance on paper and another side is what you really get. Let me answer some question and reveal the fog of ETN taxation in U.S.

ETN taxation in United States

1. How are ETNs treated for U.S. federal income tax purposes?
2. Why ETN is an attractive investment option?

How are ETNs treated for U.S. federal income tax purposes?

Usually (at least iPath ETNs) agree with investors to treat ETNs as prepaid executory contracts.

Back to the top

Why ETN is an attractive investment option?

ETN do not make any profit distribution (as it happens when you are a stock or ETF holder) therefore the gain/loss is calculated once upon the sale, redemption or maturity of ETNs and is equal to the difference between the amount investors receive at such time and the amount they paid when bought ETNs. Of course IRS and US Treasury may change tax treatment in future. (Some ETNs are treated in a different way, for example currency ETNs).
Back to the top

Got some more specific question? Think that the tax treatment changed? Leave a comment.