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Legally, people make distinctions between different kinds of ownership. So you can be the "beneficial owner" without being the "registed owner". In fact every
by OscarCunningham 7y ago
Legally, people make distinctions between different kinds of ownership. So you can be the "beneficial owner" without being the "registed owner".
In fact every public US stock is owned first by Cede and Company. Any public stock you own is a contract with them (via intermediaries). https://en.wikipedia.org/wiki/Cede_and_Company https://en.wikipedia.org/wiki/Cede_and_Company
- Tenoke 7y agoAs far as I understand, Cede's contractual rights make it so you are pretty close to 'owning' the stock compared to ETF/Mutual Fund. >So you can be the "beneficial owner" without being the "registed owner". Are you the 'beneficial owner' of an ETF's invested assets or just of the ETF instead?
- TheCoelacanth 7y agoYou are the registered owner of the ETF, but the beneficial owner of the underlying shares.
- anonu 7y agoNot correct. If you own an ETF you do not have voting rights of the underlying stocks. So you are not a beneficial owner of the underlying. You also do not have "direct" access to the dividends. The fund manager will pool the dividends and pay them out on a regular schedule, after taking their cut of fees.
- TheCoelacanth 7y agoThe IRS defines "beneficial owner" as "the person who is required under U.S. tax principles to include the payment in gross income on a tax return"[1]. Using that definition, you certainly would be a beneficial owner regardless of whether you can directly exercise voting rights or directly receive dividends. The indirectness is the whole point of the distinction between beneficial and registered owners. [1] https://www.irs.gov/instructions/iw8ben#idm140376280574400 https://www.irs.gov/instructions/iw8ben#idm140376280574400
- Tenoke 7y agoBut you don't need to write every stock the Mutual Fund invested in - just the Mutual Fund itself, so this makes it even clearer.