A top Senate Democrat has been circulating a proposal that would hit the rapidly growing world of exchange-traded funds. Big money managers are bracing for a fight.
Senate Finance Committee Chairman Ron Wyden’s proposal aims to tax ETFs’ use of “in-kind” transactions that currently avoids triggering capital-gains taxes. With such in-kind transactions, ETFs—bundles of securities that trade on exchanges—transfer appreciated stock, bonds or other assets to Wall Street intermediaries instead of cash.
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