k1 reporting (I got extra taxes on k1 but didn't get any cash div.)
I received a k1 form from ProShares Ultra-DJ UBS crude oil. I however, never received any cash (profit sharing or dividend) from my holdings in UCO during the year. By year end I did liquidate all my holdings in UCO (by dec 2012). Did someone else also get this K1 and does this need to be included with the return even if I got no cash from UCO for just holding the Etf?
I'm not trying to be a smartie, but you folks didn't do your homework very well. Your research should have shown you that UCO (as well as most ProShare ETFs) are structured as limited partnerships. As such, you, as an owner (limited partner) are subject to your ownership share of the profits and losses. Trading in or out, or how many times, does not affect that status, but the length of time you hold the asset does. And you do get the benefit of the income and capital gains (as well as losses as profit reductions) because those figures go into the recalculation of the NAV each day, so if the fund makes money, the NAV goes up and presumably so does the price, which of course benefits you. If your accountant is "baffled" about the K-1, then you need to find a more competent accountant, this really is Investing 101 material.
yes, i also received one for $402 income -- something I never received from the company. My tax accountant is baffled by it and has calls into specialists about this. I traded this thing six times last year -- I was in it no more than a couple of days each time so I don't know why I got hit with this K1 income gained.
do you find anything out on your end??
I am an Enrolled Agent and I have personally traded both UCO and SCO several times over the past few years. In addition to any gains (or losses) you report on Schedule D for these funds when you sell them, you also need to report the income that is passed through the K-1 on your Schedule E. That gives you basis which then is written off as a loss on Schedule D when you dispose of your interest. It's basically a wash with income offset by capital loss although if you hold the ETF past 12/31 the timing of the loss will not occur until the next year assuming you sell then.
8/1/12 - buy 1,000 shares UCO @ $30 = $30,000
2/1/13- sell 1,000 shares UCO @ $33 = $33,000
2012- assume you receive a K-1 with ordinary income and other items totaling $2,000
For 2012- you report $2,000 income on Schedule E
For 2013- your report ST capital gain on sale of $3,000 on Schedule D
Also, you have basis of $2,000 in your UCO partnership interest so you report ST capital loss on Schedule D.
It's best if you can buy/sell the ETFs in the same year to avoid income in one year and offsetting loss in the subsequent year. My holding time is always short term (less than 1 year) as these ETFs are not designed for long term investment, but that's another topic.
Any time if I decide I want to buy any commodity ETF outside of my IRA account I call the fund company toll free number and ask if they send out K-1 forms.If so I won't buy it.Those k-1 forms foul me up when I do my taxes.I am considering buying this ETF but I will do so only in my IRA account.
I learned a painful lesson several years ago that if you must buy this only do it in your IRA account then you can disregard those K-i's. Like you I got hit with additional taxes on money I didn't receive.