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Bill, Enrolled Agent
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Last year I owned a unit investment trust registered as a RIC,

Customer Question

Last year I owned a unit investment trust registered as a RIC, and I was told that when I took the assets underlying the UIT, tht it was a taxable event. However, I did not receive a tax document (1099) of any kind. What should I expect?
Submitted: 5 years ago.
Category: Tax
Expert:  Ed Johnson replied 5 years ago.

Dear RWCollins,

 

What was the charachter of the assets?

Customer: replied 5 years ago.
It was a portfolio of closed end funds that trade on various exchanges such as the NYSE and until 10/08 were contained in a unit investment trust registered as a regulated investment company. Does this clarify?
Expert:  Ed Johnson replied 5 years ago.

thank you,

 

I have a few more questions before I give you a response. this helps a lot.

 

You indicated in another question posted here that you took these assets in kind.

 

In kind means you recieved someting of value in exchange, so there is a cost basis in volved and a capital gain (short or long term).

 

can you describe your withdrawal of assets a bit more?

Customer: replied 5 years ago.

the UIT was composed of closed end funds and by taking in kind, I took ownership of the 'stocks' and they are now in my portfolio. I now own all of the underlying stocks (funds) in proportion to the number of units that I purchased in '07. I did not sell the entities that I took 'in kind' but still hold them. I assumed my basis went back to the original purchase date for the unit and relate to the underlying issues that were originally part of the unit, however, as a reusult of the taking of the underlying I received no 1099B if it were a actual sale.

 

Thanks, Russ

Expert:  Ed Johnson replied 5 years ago.

Dear rwcollins,

 

I am not able to give your question the time that it needs because I am on the road. I have opted out and am trying to find an expert to finish this.

Customer: replied 5 years ago.

I will await an answer since my last enhancement/clarification didn't help and you have opted out...thanks for help so far.

 

Russ Collins

Expert:  Bill replied 5 years ago.

Since Ed opted out, I am responding.

 

You did not receive a 1099 because taking a distribution in-kind when the trust terminates is not a taxable event.

 

See page 2 under "Taxes" - http://www.rjf.biz/disclosure_uit.pdf

 

See page 3 - http://www.williamblair.com/Documents/WBUIT.pdf

 

http://www.secinfo.com/dr6sj.58p.b.htm#1stPage

 

 

 

Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3078
Experience: EA, CEBS - 34 years experience providing financial advice
Bill and 2 other Tax Specialists are ready to help you
Customer: replied 5 years ago.

Bill,

 

The above links are very helpful. My original inquiry was related to the application of any such taxable event for a 'RIC' distribution in kind vs same from a grantor trust. Since no tax documents have been forthcoming, I was reluctant to proceed 'assuming' that there are none untill the securities are sold.

 

I'm still awaiting word back from Claymore, where the original red flag was raised but not defined.

 

Russ

 

 

Expert:  Bill replied 5 years ago.

A unit investment trust is a registered investment company so an in-kind distribution upon termination of the UIT should not be a taxable event. The same type of distribution from a revocable grantor trust would also not be a taxable event.

 

http://www.ici.org/funds/abt/faqs_uits.html

 

Customer: replied 5 years ago.

Thanks for the re-assurance.

 

Russ

Expert:  Bill replied 5 years ago.
You're welcome.

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EA, CEBS - 34 years experience providing financial advice