CPAs should know the difference between ETFs and mutual funds.

Current shareholders of mutual funds pay taxes on distributions, while former shareholders—who may have benefited from the gains that created the distributions—do not. ETFs, on the other hand, use a swapping feature to eliminate embedded capital gains from the portfolio. Each security the ETF holds has a tax basis, and the fund distributes the lowest-cost-basis securities in its portfolio during the redemption process. The redeeming investor is responsible for taxes, and the ETF ends up with a higher-tax-basis portfolio and fewer capital gains to distribute—reducing capital gains exposure for investors when the fund must sell a particular stock during rebalancing. Whenever an investor redeems a basket of securities, the fund gives that redeemer the lowest-cost-basis stock. It doesn’t matter to the redeemer, which pays taxes based on its individual cost basis, not the basis of the underlying stock. .... http://www.aicpa.org/pubs/jofa/jan2002/bern.htm