Let's suppose that you invest in an accumulation ETF/mutual fund, whose automatically re-invest dividends.
In such case, those dividends should not be taxable since you actually never receive them. However, I have read that these dividends are not-taxable only if your brokerage firm doesn't provide you the option of distributing them. Let me explain:
Let's suppose there is brokerage firm that offers an ETF and the investor can choose if the dividends are directly reinvested or, conversely, distributed. In such case, even if you choose to re-invest dividends, they are taxable. Is this true?
Does this apply for different ETFs? That is, let's suppose that a brokerage firm offers exactly the same ETF but in two different versions, distribution (don't reinvest dividends) and accumulation (reinvest dividends), and an investor choose the accumulation one. Are those non-distributed dividends taxable?