Thanks Dave. Refreshing to know that there are still good people doing new white hat work in the ETF space.
Btw. Is there a better alternative to BOXX for the part of one’s portfolio where we want short term treasury yields but treated as cap gains rather than current income?
BOXX is a tricky one. There's really not another magic tax-washer fund that I know of. THe BEST way to do this would be in an ETN where the tax treatment is very clearly prepaid forward contracts. If you want the income NOW but want it treated as LT cap gains instead of current income, I think you're crossing over that ol' IRS "Economic Substance Doctrine."
In short: if a structure exists ONLY as a tax dodge, the IRS can come knocking. From USC 26-7701. Not a tax guy by trade, but I've seen plenty of ETF ideas die on this language:
Thank you very much! I had a hunch that if you replied, it would be high-quality. But you went for a ultra high-quality reply and I really appreciate your extra thoughtfulness.
Really useful. Thank you.
Thanks for your support!
Thanks Dave. Refreshing to know that there are still good people doing new white hat work in the ETF space.
Btw. Is there a better alternative to BOXX for the part of one’s portfolio where we want short term treasury yields but treated as cap gains rather than current income?
BOXX is a tricky one. There's really not another magic tax-washer fund that I know of. THe BEST way to do this would be in an ETN where the tax treatment is very clearly prepaid forward contracts. If you want the income NOW but want it treated as LT cap gains instead of current income, I think you're crossing over that ol' IRS "Economic Substance Doctrine."
In short: if a structure exists ONLY as a tax dodge, the IRS can come knocking. From USC 26-7701. Not a tax guy by trade, but I've seen plenty of ETF ideas die on this language:
"o) Clarification of economic substance doctrine
(1) Application of doctrine
In the case of any transaction to which the
economic substance doctrine is relevant, such
transaction shall be treated as having economic
substance only if—
(A) the transaction changes in a meaningful
way (apart from Federal income tax effects)
the taxpayer’s economic position, and
(B) the taxpayer has a substantial purpose
(apart from Federal income tax effects) for
entering into such transaction."
Thank you very much! I had a hunch that if you replied, it would be high-quality. But you went for a ultra high-quality reply and I really appreciate your extra thoughtfulness.
Keep up your great work!