Exchange-Traded Notes' Tax Perks Under Attack
Exchange-traded notes have been marketed as a tax-efficient way to invest in currencies and other hard-to-reach asset classes.
But their tax treatment has suddenly changed from a selling point to a potential drawback. Earlier this month, the Internal Revenue Service ruled that ETNs -- or at least the ones tracking foreign currencies -- should be considered debt for federal tax purposes. That means that even if you hold the shares for more than a year, you won't qualify for the lower long-term capital gains rate of 15%. Both capital gains and interest will be taxed as ordinary income, which is subject to rates up to 35%.TheStreet Premium Services For Personal Service: 877-471-2967
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| Dow Jones | S&P 500 | NASDAQ | 10-Year Note | |
|---|---|---|---|---|
| 12,890.46 | 1,351.95 | 2,927.23 | 20.47 |
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