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Lev, Tax Advisor
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bkb1956 or RobinDIn my fidelity brokerage account, I have

Resolved Question:

bkb1956 or RobinD
In my fidelity brokerage account, I have silver etf slv. I sell covered call and puts on etf throughout the year. If I purchased etf for $2200 in beginning of 2013. I sell 1 covered call every 3-4 months in the year which expire worthless. I received $200 in premium by selling these covered calls. Value of my silver etf at end of 2013 becomes $1900 and I am still holding it.
Will $200 be considered income for year 2013 as gold and silver are collectible ?

As total value of my security and received premium in 2013 end is $2100 ($1900 + $200) which is less than initial amount of $2200. I have 0 or -$100 collectible gain in year 2013.
Submitted: 1 year ago.
Category: Tax
Expert:  Barbara replied 1 year ago.

First, thank you for requesting me to assist you.

 

You are correct that the IRS treats gold, silver and other precious metals as "collectibles." However, they do not qualify for the 15% maximum tax rate on
long-term capital gains. Instead, gains on precious-metal ETFs that you've held
for more than one year are taxed at your ordinary income rate, up to a maximum
of 28%. If you hold the ETF for less than a year, gains will be taxed at income
rates up to 35%.

 

Please let me know if you require further information or clarification.

 

Thank you and best regards.

 

Barb

Customer: replied 1 year ago.

In this example, if I buy silver etf in beginning of the year at $2200. I receive $200 within year 2003 by selling covered calls on it which expire worthless. At end of year 2013, value of silver etf reduces to $1900 and I still own it. Will I have taxable income of $200 in year 2013. or will my taxable income be 0 or -$100 because


total value of security and premium received = $1900 + $200 = $2100 < $2200

Expert:  Barbara replied 1 year ago.

I apologize for only addressing one part of your question.

 

Based on the information you have given me, you have a loss of $100.00.

 

Thank you.

 

Barb

Customer: replied 1 year ago.

Silver etf buying price in 2013 beginning = $2200


Premium received by selling covered calls = $200


Value of Silver etf at 2013 end = $1900.


As profit and loss of etf will be computed when it is sold. As silver etf is not sold at 2013 end but maintained. Will decrease of $300 be used in capital gain/loss calculation for tax purposes. or it will be only $200 gain in premium received.

Expert:  Barbara replied 1 year ago.
I will opt out and let another expert assist you on this. Thank you.
Expert:  Lev replied 1 year ago.
Hi and welcome to Just Answer!
Generally - NO gain or loss is realized unless the asset is sold or otherwise disposed.
Thus if ETF shared are not sold in 2013 - neither gain nor loss is recognized. If ETF shared will be sold in 2014 - the gain or loss will be reported on 2014 tax return.

If you write a coverred call - premiums received is NOT included in income at the time payment is received, but income for tax purposes is recognized when your obligation to deliver the underlying stock expires or when you either sell the stock as a result of the call assignment or by closing the option position (buy-to-close).

Please see some additional details in this article - http://budgeting.thenest.com/taxation-covered-calls-24353.html
Let me know if you need any help.
Customer: replied 1 year ago.

LEV

If at end of 2013, one sells etf on 31st december 2013 for $1900 and buys it immediately to avoid any lapse, can one use it to show that there is no capital gain in year 2013

 

Expert:  Lev replied 1 year ago.
If ETF shares are sold on 31st December 2013 - the gain or loss is recognized.
You will report the gain on your tax return.
However if you have a loss and immediately buy shares of the same ETF - that will be a wash sale - and the loss may not be deducted but will be added to the basis of shares you repurchase..
If you have a gain - that gain would be reported on 2013 tax return.
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Experience: Taxes, Immigration, Labor Relations
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