My 1099 lists "Gross proceeds investment expense" and this is being listed as sales profits. How can this be fixed?

[kire589]

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.

https://support.wealthfront.com/hc/en-us/articles/[phone number removed]2-How-do-I-report-taxes-for-... 

::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.

[davidcjonesvt]

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!

[GeorgeM777]

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. 

@Bphon2378

[James1227]

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

[DawnC]

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

[davidcjonesvt]

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.

[Moggy]

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!

[Moggy]

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!

[davidcjonesvt]

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.

[Taxes Galore]

@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?

[GeorgeM777]

To follow-up on the comments from @DawnC, yes, box e is for cost basis.  Therefore your $25 cost basis should be entered in box e and the result will be a loss of $5.

@Taxes Galore

[Sdc2022]

Thank you. I read through all these comments. GBTC is a greedy company that also doesn't mind inconveniencing its shareholders. I can't wait to sell it. It seems like you have to figure out what the cost basis is regardless to get the "needs review" to go away, but your advice here to then check that box is very helpful in order to have these fees (taken by GBTC to pay for their own expenses) ultimately deducted from my capital gains. So you have to enter the date acquired  (which you can find through logging into your brokerage account) and the cost basis via the formula another gentlemen pointed out on the thread (share price you bought it at) x (# of shares) x (cost basis factor) = your cost basis. The cost basis factor should look something like this on your brokerage consolidated statement (.[removed]). That is listed. Also Wealthfront does have a free excel form that you can use that has all the dates they sold each week and the corresponding amount/price - i.e. the cost basis factor. I copied and pasted that list from their excel and then used the formula above in excel to get all the various cost basis. I just dragged the formula  down the page and voila - it was easy. The hard part is just entering in each of the entries that need review- tedious, but hey, we can thank the greedy managers at Grayscale- which now trades at a 30% discount. 🙂

[Sdc2022]

I am not that knowledgeable with tax advice, but from my understanding you should be able to deduct this fee because when you sell stock or crypto, they allow you to subtract the amount from the total gain. In this case, they are selling the shares and the proceeds go to grayscale to account for their "fee" so we as taxpayers should NOT be counting this as gains as the money is not coming to us. That seems like common sense (not tax advice) so I am checking that box that says sales was not included, and I am putting in the exact amount they sold for their fee. Maybe I should put the difference between that amount and the cost basis, but at the end of the day, I want to completely eradicate the fee as any sort of cap gains that I took. I feel okay about this as the full amount is listed as my expenses/fees at the very top of the brokerage consolidated form. 

[stevenma1]

I have the same issue, are we supposed to manually update the cost basis by subtracting the prorated expense per share?  I was sent a package that gave me the month expense per share as well as the daily expense per share for the entire year.  Example the expense for the full month of January is .05629973 per share.  I have around 25 lots of shares I sold this year.

[RobertB4444]

@Sdc2022 and @stevenma1  I understand where you're coming from - I really do - but taxes aren't always logical.  If you make money and then spend it on something that is non-deductible then you have to pay taxes on the money that you made and you don't get to deduct the thing that is non-deductible.  This is true of hats and financial advisory fees.  

Fees for the actual trades (per trade fees) can be added to the basis of the stock as the cost that you paid for the stock sold.  But overall fees for managing your account are not deductible on your tax return since the Tax Act of 2018.

Here are links to some further information.