Apparently the company sells shares monthly to pay it's fees.
The sales are income to you even though you never see the proceeds, instead they are used to pay the fees.
Below is a link with more information:
Thanks for the feedback. I still dont know how to move on though. Turbo Tax keeps reminding me to review these "Gross proceeds investment expense" items but adding my cost basis or date of purchase does not help. Im stuck on this to file.
When you entered your basis, did you click "I need to adjust my total cost basis" and then selected any codes to go with it?
Is this for gold?
Its for GBTC (Bitcoin Trust). Small monthly expenses show up under a category on my 1099 as:
UNDETERMINED TERM TRANSACTIONS FOR NONCOVERED TAX LOTS [Ordinary gains or losses are identified in the Additional information column] (Line 5)
Report on Form 8949, Part I with Box B checked or Part II with Box E checked. Basis is NOT provided to the IRS. (Line 12)
“Date acquired,” “Cost or other basis,” "Accrued market discount," "Wash sale loss disallowed" and “Gain or loss (-)” are NOT reported to the IRS.
Turbo Tax sends me to a page with:
Sales section title
The company is selling your shares to pay expenses each month. These are sales. You must report them and you need to put in the basis for each of these sales.
The term not covered means the brokerage does not know your basis and you must enter it.
Covered means the brokerage thinks they know your basis.
Reported means it has been reported to the IRS on a tax form, You have the tax form.
But how can I find out the cost basis of the "Gross proceeds investment expense"? It is not listed on the 1099.
For me it is GLD and SLV. The form only listed the 1c date, Quantity is all 0, 1d- Proceeds & 6- Reported (G)ross or (N)et, Data acquired: NA. Then in Additional information it listed Principal payment Cost Basis Factor. How should I proceed?
I am having the same issue - please help! What do I do with the gross proceeds? They do not have a cost basis listed in my 1099.
Please review the answers and links in this thread. They will answer your question.
The sales are income to you even though you never see the proceeds, instead they are used to pay the fees.
Below is a link with more information:
Just in case this helps anyone in the future, here's what I did (and I believe this is the right thing to do)...
Find out your purchase date (i.e. 01/01/2018) - the sale will remain in "Review" status unless you enter this.
Find out your earliest purchase price, since the default is First in, First out (FIFO) (i.e. $15)
Find out the number of shares. (i.e. 5000)
Your 1099 will look something like this:
11/24/20 0.000 24.81 N/A ... ... ... Principal payment 16 Cost Basis Factor: 0.[removed]
So to calculate your cost basis, you do this:
(Share price) x (# of shares) x (Cost Basis Factor) = Cost Basis
In my example, it would look like this:
$15 x 5000 x 0.[removed] = $24.42
That means my gain/loss = 0.39 (or zero as far as IRS is concerned.)
I had over 60 of these transactions, so it was extremely tedious.
Hope this helps someone.
This is interesting. I was wondering what that was for.
Are you sure that's how you use it?
I went through the GBTC Tax document (for 2021) and did all 6 steps - calculating pro rata ownership, cost basis, total proceeds, etc for each tax lot I had and it did not match with the total proceeds I had on my 1099-B. It was tedious. The total proceeds that I calculated (on Excel) were fairly close (~$16) to the cumulative proceeds that Grayscale cumulatively reported though. In the end I calculated a capital loss. I must be doing something a little wrong. I'm trying to figure out how s factor
What I don't like about the Grayscale Tax document is that the proceeds are charged weekly---how do they come up with that number exactly?
For instance--
When calculating the cumulative proceeds, they outline how you calculate a transaction/tax lot from the purchase date till end of year (vs. calculating weekly proceeds for your tax lots that you've acquired up to the transaction/expense date). I'll probably have to get a tax advisor to figure it out.
Perhaps, however you seem to know all the details of your transactions and that's all it takes. As far as the $16 difference, you can add or subtract that from your gross proceeds to arrive at the correct total of sale proceeds reported on your Form 1099-B. You can use the 1099-B section to enter your cryptocurrency sale (see below). Repurchase is not part of the equation except when the repurchased items are sold at which time the cost basis is needed. Any gain or loss from actual transfers/sales is reported regardless of what the funds were used for.
Be prepared with the following information:
You can do a summary of long term and then short term combinations (long term holding is more than one year, short term holding is one year or less). Make one entry for each. You can then send the worksheets or statement with Form 8949 after your return is accepted, attached to Form 8453.
If you are e-filing your tax return, then mail your statements (including Form 1099-B), along with Form 8453 to:
Internal Revenue Service
Attn: Shipping and Receiving, 0254
Receipt and Control Branch
Austin, TX 73344-0254
If you need a blank Form 8453, you can download this pdf, enter your address information and check the box for Form 8949 (this form is really just a cover sheet).
I'm in the same predicament. I see what you did. My question is these are weekly fees from GBTC. Shouldn't they be deductible since you are not profiting from the sale and they actually an "expense". Right now, you're showing your cost basis and short/longterm gains. How would you write this off as an expense since this was a fee by GBTC ?
I do not believe the expenses are deductible, at least filing for standard deduction. I think it might be different if itemized deduction
Anyways, -none of this is tax advise 🙂 -
If anybody cares:
I found a GBTC tax calculator spreadsheet, which helps and you can see the mechanics of how the weekly 'cost basis factor' is used (which is found on your 1099-B form).
The thing is, the sales proceeds were actually LESS than the proceeds that GBTC took out vs doing my own calculation (doing the GBTC six step tax procedure). It was further off. Even so, I had about a 100-101 dollar capital loss on both calculations. So I am just using the reported 1099-B proceeds and taking the lower cost basis that I calculated between my calculation vs the "tax calculator". It's a loss either way. I am not going to hire an advisor just to go through this and there's no guarantee he'd get it right.
The tax calculator uses the pro-rated proceed expenses (as listed on the GBTC spreadsheet) in accounting for having a share for a portion of a month. However, if you follow the GBTC tax document it shows that accounting for a portion of a month you do (number of days owned/ number of days in the month). This produces a different figure than there monthly pro-rated expense number (which varies every week and doesn't match (days owned/days in month). So that might explain why I can't seem to get an exact cumulative proceeds match.
Here's a link to the GBTC calculator. You can input the sale date as 12/31/2021 for your transaction/tax lot, even though you may not have sold it. You'll see the weekly schedule of expenses.
::The URL is being parsed--due to it thinking it's a phone #. Search "GBTC tax calculator Wealthfront" on Google
Here's how the cost basis factor comes into play
Each Tax Lot:
cost basis (full purchase price for tax lot) * weekly cost basis factor (found on your 1099-B form) = Cost basis
You will need to make those calculations for the duration you owned the lot/stock in the year and add them up. The tax calculator helps you do this and it will make sense.
For the life of me I could never even get my first few tax lots (made within the first week) to equal the amount of proceeds they took the first week on my 1099-B.
I initially bought GBTC for the convenience, making it easy to do taxes and not worry about keeping track of cost basis/transaction dates of BTC. I had no idea about the tax implications of owning the stock--that is for tax reasons you are responsible for assessing the basis on when they sell the underlying asset (for mgmt expense). How convenient for them.
Hope that helps.
I completely agree with you. Bought GBTC as a convenient way to hold BTC. As you noted, it gets very complicated. Sure, I can go through each of their sales of the underlying BTC to pay expenses and determine if each of those made a capital gain/loss. I can adjust my purchase price basis in dollars for my GBTC shares and also adjust how many BTC in the trust I still control. I ran all the numbers for 2020 (purchased GBTC in April 2020), and my figures at the end for proceeds matched my TD Ameritrade statement; however, since TD Ameritrade didn't list the basis for each expense sale, I had to do that spreadsheet. That is painful, but sort of manageable. However, when I see I must do this all separately for each separate lot of GBTC shares I have purchased, now that is really getting out of hand. Too many spreadsheets. All those investment expenses do add up, but even with itemization, I believe they fall in the miscellaneous deductions, and that needs to be > 2% of you AGI to have an impact if I remember correctly. Not going to get there. I am very tempted to just sell it all when my shortest held lot hits the long term capital gains mark and then just put it in BTC directly. GBTC is nice, but unless it converts to an ETF and if that fixes this complicated nonsense.
I guess the other option is to just get to the Long term capital gains line. Sell all the lots. Wait for > 30 days (and maybe the next correction) and re-buy as one big lot to avoid the wash-sale rules. Gotta be a better way!
The weekly GBTC fees are probably not deductible. Prior to the Tax Cut and Jobs Act, taxpayers were allowed a tax deduction for certain expenses known as “miscellaneous itemized deductions.” Miscellaneous itemized deductions included expenses such as fees for investment advice, IRA custodial fees, and accounting costs necessary to produce or collect taxable income. For tax years 2018 to 2025, these deductions have been eliminated.
If you itemize your deductions, you may be able to claim a deduction for your investment interest expenses. Investment interest expense is the interest paid on money borrowed to purchase taxable investments. However, in your situation, it does not appear that you are borrowing money, and incurring an interest expense. Rather, it appears that the fees you discuss are fees that GBTC charges the investors in connection with managing GBTC. As such, it does not appear that the GBTC fees are of the type of investment expense that might be deductible provided the taxpayer itemized their deductions.
If the GBTC fees were a type of commission paid in connection with owning the cryptocurrency, then such fees would not be deductible, either as business or nonbusiness expenses, but rather would be added to the taxpayer's cost of the cryptocurrency.
Then how would this be entered into Turbo Tax? The line in question is "Undetermined B or E (basis not reported to the IRS
Proceeds are 200.90
When I attempt to add a line to turbo tax for these proceeds my cost basis and net gain or loss does not match my 1099B
You should enter the 1099-B exactly as you see it. There is a spot to enter less common adjustments for expenses that were not deducted from the proceeds. Checking this box will add adjustment code E to this sale and reduce the gain (or increase the loss) by the amount of selling fees you enter.
Most of the time, brokers will report only the sales price net of any selling fees on Form 1099-B, so no further adjustment. (For example, if you sold stock for a total of $5,000, but only received $4,980 because of a $20 sales fee, usually the Form 1099-B will show $4,980, and no further adjustment is needed.) However, if you paid additional fees not reflected in the sales price, check this box and enter the fees you paid. This adjustment is common for real estate sales reported on Form 1099-S. In this situation, the broker fees and other sales expenses are generally not subtracted from the reported sales price.
You posted a comment on an old thread with a lot of comments, so I am not clear on your question. If the above does not help you, please start a new thread here and provide some details that are specific to your situation. Thanks! @James1227
You are correct about them not being deductible for the federal taxes, but TT still asks for expenses in case your state allows them somehow.
Between my 1 GBTC & 1 ETHE purchases, it generated 117 sale transactions. What I am doing is selecting the summary option. TT imported my "Total Proceeds" so I just have to enter the cost basis and sale category. I only bought 1 time so easy to calculate the cost basis. Enter that and then select the sale category "short term non-covered". I have to do this 117 times though!
EDIT to my previous post: the Cost Basis Factor is provided from TD Ameritrate under "Additional Information" on the Consolidated 1099. I had to multilpy this with the Total Cost Basis (Amount purchased + Commission) . I entered this on the "Total Cost basis (sum of all 1e)" line in TT.
TIP: Use an excel sheet!
Right, they are not deductible on Fed taxes for a few years, but TT suggests they still be entered in case one's state allows them.
@DawnCTo be concrete, say I have $20 in proceeds reported on my 1099B with undetermined cost basis. Using the cost basis factor, I computed my cost basis to be $25. Do I put this in box E, and thereby result in a reported loss of $5?