The way the 2013 WHFIT guide reads, each of the small "sales" are treated as capital gains/losses that you declare as such when they happen. You pay the tax on them as such, because IRS counts what you own as the BTC not the shares of stock. In the background, because you have sold off some of your initial bitcoin, there is less bitcoin left when you finally sell the shares of GBTC that covers your bitcoin. You actually reduce the actual initial basis (cost) by the amount of initial $ cost that was covered by all the sales along the way. So if you bought 10 sh of GBTC for $10 each (so total $100) that, based on BTC price, represented 20 BTC (I know this isn't close to accurate, it's just for illustration), you basically paid $5 per controlled bitcoin. Then along the way, Grayscale sold off 0.5 BTC for expenses, that would have reduced your initial cost basis to $97.50 (because when they sold that 0.5 BTC for some amount of money, you would have declared a capital gain/loss based on the price they sold it for compared to the $2.5 it cost you based on your initial purchase). When you finally sell the 10 sh of Grayscale, you get to (should) adjust the initial cost from $100 to $97.50. This has the unfortunate effect that any gain you have at the sale is increased by $2.50 (or loss decreased by $2.50), but you have already accounted for the gain/loss on that initial $2.50 in BTC back when it was sold for the expenses. That is my take.
