What is a K-1? | Blog

How and when will I receive my K-1?

K-1? You will receive your K-1 in the mail at the address provided by your broker or it can be

provided in an electronic format for even faster delivery.

Visit https://www.taxpackagesupport.com/teucrium to eliminate the

paper K-1.

The statements are generally available by mid mid-February.

Through the link below you will be able to: view your tax package,

print your tax package including instructions, automatically transfer

amounts from your Schedule K-1 to IRS forms filed by individuals,

download a file of your tax information that can be imported into

TurboTax software, and request changes to incorrect information.

The toll toll-free number, 877 877-826 -1588, is available for

support and questions.

What is a K-1?

K-1? A Schedule K-1 (“K-1”) is “a tax document used to

report the incomes, losses and dividends of a business' partners or

S corporation's shareholders. Rather than being a financial

summary for the entire group, the Schedule K-1 document is

prepared for each partner or shareholder individually.”¹

Why do the Teucrium Funds issue K-1s instead of 1099s?

The Teucrium Commodity Trust (the “Trust”) is a Delaware series

trust, and each Fund is a series of the Trust. The Trust is

organized and will be operated as a statutory trust in accordance

with the provisions of the Trust Agreement and applicable Delaware

law. Notwithstanding the Trust’s status as a statutory trust and

each Fund’s status as a series of that trust, due to the nature of its

activities, each Fund will be treated as a partnership rather than a

trust for U.S. federal income tax purposes. In addition, the trading

of Shares on the NYSE Arca will cause each Fund to be classified as

a publicly traded partnership for federal income tax purposes.

Therefore, because the Funds are considered to be partnerships,

each Fund will issue K-1s annually to shareholders instead of

1099s.

What will the K-1 reflect?

In situations where a partner’s

interest in a partnership is redeemed or sold during a taxable year,

the United States federal tax code generally requires that

partnership tax items for the year be allocated to the partner using

either an interim closing of the books or a daily proration method.

Each Fund intends to allocate tax items using an interim closing of

the books method under which income, gains, losses and

deductions will be determined on a monthly basis, taking into

account the Fund’s accrued income and deductions and gains and

losses (both realized and unrealized) for the month. The tax items

for each month during a taxable year will then be allocated among

the holders of Shares in proportion to the number of Shares owned

by them as of the close of trading on the last trading day of the

preceding month (the “monthly allocation convention”).

Under the monthly allocation convention, an investor who disposes of a Share during the

current month will be treated as disposing of the Share as of the

beginning of the first day of the immediately succeeding month. For

example, an investor who buys a Share on April 10 of a year and sells it

on May 20 of the same year will be allocated all of the tax items

attributable to May (because the shareholder is deemed to hold the

Share through the last day of May) but none of those attributable to

April. The tax items attributable to that Share for April will be allocated

to the person who is the actual or deemed holder of the Share as of the

close of trading on the last trading day of March. Under the monthly

allocation convention, an investor who purchases and sells a Share

during the same month, and therefore does not hold (and is not deemed

to hold) the Share at the close of the last trading day of either that

month or the previous month, will receive no allocations with respect to

that Share for any period. Accordingly, investors may receive no

allocations with respect to Shares that they actually held, or may receive

allocations with respect to Shares attributable to periods that they did

not actually hold the Shares. Investors who hold a Share on the last

trading day of the first month of the Fund’s operation will be allocated

the tax items for that month, as well as the tax items for the following

month, attributable to the Share.

The Fund creates and redeems Shares only in blocks called Creation

Baskets and Redemption Baskets, respectively. Only Authorized

Purchasers may purchase or redeem Creation Baskets or Redemption

Baskets. For any month in which a Creation Basket is issued or a

Redemption Basket is redeemed, the Fund will credit or debit the “book”

capital accounts of existing Shareholders with the amount of any

unrealized gain or loss, respectively, on Fund assets. For this purpose,

unrealized gain or loss will be computed based on the lowest Net Asset

Value (“NAV”) of the Fund’s assets during the month in which Shares are

issued or redeemed, which may be different than the value of the assets

on the date of an issuance or redemption. The capital accounts as

adjusted in this manner will be used in making tax allocations intended

to account for differences between the tax basis and fair market value of

property owned by the Fund at the time new Shares are issued or

outstanding Shares are redeemed (so so-called “reverse Code section

704(c) allocations”). The intended effect of these adjustments is to

equitably allocate among Shareholders any unrealized appreciation or

depreciation in the Fund’s assets existing at the time of a contribution or

redemption for book and tax purposes.

Under the IRS Code, special rules apply to instruments constituting

“section 1256 contracts.”. Section 1256 contracts held at the end of

each taxable year are treated as if they were sold for their fair market

value on the last business day of the taxable year ( i.e. , are “marked to

market”). In addition, any gain or loss realized from a disposition,

termination or marking marking-to -market of a section 1256 contract is treated as

long-term capital gain or loss to the extent of 60% thereof, and as short short-term capital gain or loss to the extent of 40% thereof, without regard to

the actual holding period (“60 60-40 treatment”).

Information regarding the tax consequences of ownership of shares in

each of the Teucrium Funds for U.S. shareholders is available in the

prospectus for each Fund under U.S. Federal Income Tax Consideration.