If this is something like GBTC, it is a true sale. Grayscale sells the underlying asset (bitcoin) to pay expenses. The IRS expects you to track those sales, declare the gain or loss, pay long/short-term capital gains taxes if a gain, and then reduce your basis accordingly. It is WAY complicated. If you are referring to some other "stock" that does this sort of thing, I am sure it is the same. If it is GBTC, you can go to the Grayscale website and download the 2023 tax letter, which explains it and how to do it. I manage a spreadsheet, and it is worse since I bought several lots of GBTC at different times...
