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Q: I didn't receive any cash distribution on my Shares. Why are there reportable items on my Schedule K-1 that are subject to tax?
A: No U.S. federal income taxes are paid by the funds. Instead, the funds file an annual information return and each Shareholder is required to report on his/her U.S. federal income tax return his/her allocable share of the income, gain, loss and deduction of the funds. The funds have not made and do not intend to make any distributions; this means Shareholders are required to report their allocable share of income whether the income is distributed or not.
Q: Why do I receive a Schedule K-1 rather than a Form 1099?
A: Since the funds are treated as partnerships for U.S. Income Tax purposes, the information is required to be reported on a Schedule K-1 instead of a Form 1099.
Q: Why didn't I receive my Schedule K-1 by January 31, which is the date required for distribution of Forms 1099?
A: The funds strive to provide the Schedule K-1 information as early as possible, typically by the second week of March. The Funds must obtain information regarding ownership interests bought and sold during the year from brokers and nominees. Much of this information is not provided to the funds until late January. This information is reviewed and then processed with other information resulting in printing and mailing during March. In general, the funds are required to provide this information by March 15th, or September 15th if an extension is requested.
Q: Why doesn't my financial advisor/accountant/broker receive this information for my account?
A: This information is only sent to the address associated with the account in which the Shares of funds are held. Currently, it is the obligation of the funds to provide the information directly to the Shareholder. The funds are not able to accommodate any special or duplicate mailing requests.
Q: If I purchased Shares, what is my tax reporting responsibility for this investment?
A: Please consult a tax professional. Generally, any income, capital gain/loss, expense and other items reported to you on the Schedule K-1 must be included in your tax return.
Q: If I sold Shares, what is my tax reporting responsibility for this transaction?
A: Please consult a tax professional. Generally, your gain/loss on the sale of Shares must be included in your tax return. The sales schedule reflects sales of your Shares and includes related adjustments to your tax basis.
Q: How is my tax basis determined for computing gain or loss?
A: Your tax basis is generally the original amount paid for the Shares adjusted as follows:
- Increased by the allocable share of income and gain reported to you on the Schedule K-1
- Reduced by the allocable share of expense and loss reported to you on the Schedule K-1
Please consult a tax professional.
Q: Is any of the allocated income Unrelated Business Taxable Income (UBTI) to tax-exempt investors?
A: Not under current federal income tax laws.