Hi all,
The other day I was looking at the articles posted by Doug (nice articles, Doug, -- good reports), and I read the part where he referred to getting a Beta Rating for the Sector ETFs from Morningstar. I went over to that site, and while reading some of their information on Leveraged and Inverse ETFs, came across a statement that I had never seen before.
The statement was to the effect that Leveraged and Inverse ETFs may not qualify for Long-Term Capital Gains consideration, regardless of how long the investor has held the ETF, because of their "daily resets".
Do any of you know, from experience, anything about the tax consequences? If there are times when they do qualify for L-T? Or specific times when they do not qualify?
I am going to "run into" this situation this year because I have been using long-term moving averages (20 Week & 52 Week MAs) in my taxable account and I had a sale in February this year of a position in TNA (3X Leveraged ETF of the Russell 2000 Index) that I had purchased in Nov of 2012 (held for 15 months). The Total Gain on the position was about 147%, so I filed (and paid) Estimated Taxes on the Long-Term rate (20%). I used one of the Internet Tax Programs and it did not alert me to any problem. But the difference between Short-Term Cap rates and the Long-Term will be "significant", especially if there are "penalties" for underpaying.
I am not looking for "free" information (I know TooFuzzy is working in the Tax Preparation field), but, if this is true, I need to re-think how I work my taxable account.
Bob
