Where do I deduct 'Proceeds Investment Expenses' that appear on my Consolidated Tax from for my 'SPDR Gold Tr' shares?

[rmfrog1]

I held the 'SPDR Gold Tr' shares all year with no transactions. My Consolidated tax form shows 'Proceeds Investment Expenses' for them totaling negative $36.81. Is this an expense that I can deduct somewhere - if so, where? OR, since it states that it's a negative expense, does that make it an income? Where do I enter this negative number in IRS forms? Thanks!

[MinhT1 · Accepted solution]

This negative number is an expense.

This investment expense used to be deductible as an itemized deduction subject to the threshold of 2% of AGI.

However, this deduction has been suspended by the Tax Cuts and Jobs Act of 2018.

Therefore, this expense is no longer deductible,

[lbeachmike]

Are you absolutely positive about this? I have this for Grayscale Bitcoin Trust. Mine is also shown as a negative number. It appears that it would be entered inside TurboTax in the Investment Expenses screen, after the Investment Interest Expense (Margin Interest) screen. When entered there, it populates in the 4952 Worksheet and has a tax impact. Are you saying it should not be entered here?

It appears to be applicable based on the info under Learn More.

[DianeW777]

Yes, that is correct as stated by @MinhT1.  For tax years 2018 to 2025, "miscellaneous itemized deductions" have been eliminated. Prior to the Tax Cuts and Jobs Act of 2017 (TCJA), taxpayers were allowed to deduct expenses such as fees for investment advice, IRA custodial fees, and accounting costs necessary to produce or collect taxable income. 

• IRS Publication 529 - see Investment Fees and Expenses

[lbeachmike]

But it is asking for precisely this information inside TurboTax, and it is populating that info in the associated form as specified. So TurboTax wasn't updated to reflect the new rules you are pointing out? These are not just any random miscellaneous fees, these are pass-through expenses for this unique type of trust. I believe that these may be excluded from the rule changes. 

[lbeachmike]

I guess I posted too quickly - taking a quick look at IRS Publication 529, it does look like it also excludes fees from pass-through entities. I'll have to process it more thoroughly to make certain it applies to Grayscale's Proceeds Investment Expense.

[lbeachmike]

Sorry for multiple replies. Here's where I am stuck -

1. Pub 529 does say that "Indirect deductions of pass-through entities" are disallowed

2. TurboTax has info that contradicts this in the Investment Expenses screen. It specifically provides the below guidance -

These investment expenses must be expenses you were allowed to take against other investment income. These are not common. Some examples are:

- Expenses passed through to you on a schedule K-1

- Depreciation or depletion allowed on assets that produce investment income (e.g. oil depletion)

So it is specifically guiding that certain pass-through expenses may be deducted.

Is there a contradiction because nobody is bothering to keep the TurboTax software up to date any longer as the quality continues to deteriorate? Or is it because there are exceptions, and perhaps my situation is an exception?

I think Intuit is doing an extremely poor job maintaining very basic things about TurboTax. It's too bad, because this once was great software, but I may be submitting a request for a refund due to simply too many errors in the product.

[DianeW777]

Yes, some pass through expenses are deductible. In your example of oil & gas depletion, it is an allowed expense if you have royalty income form oil and gas properties even if it is through a pass through entity and reported on a K-1.  The tax law is complicated to say the least, but investment expense is not the same a a depletion of the mineral property that was purchased as it is being extracted.

Tax software must account for various scenarios and the intricate details of the tax law so for these reasons it can and will be confusing at times.  Maybe you could provide more detail about what your investment expenses consist of, but in general these expenses are not allowed for the time period indicated in the previous post.  It may come back in 2026 depending on Congress.  Keep in mind that investment expenses that were previously allowed to be used were only deductible to the extent they exceeded 2% of your adjusted gross income which can mean a zero deduction depending on income and total expense.

@lbeachmike 

[lbeachmike]

Thanks for your response.

I am not talking about oil or gas depletion. Perhaps that was in the TurboTax example.

I am using 2022 Home and Business Desktop Software. In the software, you can navigate to the screen for Personal Deductions > Investment Interest Expense. Here the first screen is for Margin Interest Expense - most definitely deductible. Then navigate to the next screen, which is called "Investment Expenses" - here certain types of investment expenses are deductible and there are a couple of examples.

My case is "Proceeds Investment Expense" from Grayscale Bitcoin Investment Trust. The trust periodically sells Bitcoin in order to cover its fees. On the 1099, they report both the gains/losses of pass-through transactions, which get populated in Schedule D. They also list the "Proceeds Investment Expense" which appears to be the pass-through of the expense that is covered by the bitcoin sales (since the total amounts are the same.)

Because this is a pass-through expense, I thought it would be deducible on the specific screen I mention in Turbotax, which then populates into "Form 4952 Investment Interest Expense Worksheet"

So is this one of the expenses which is deductible where I describe?

[rab2025]

Hello,

So this "Gross proceeds investment expense" is showing up on TurboTax as a sale in my 1099-B. Do i just delete the "sale" since it is not a sale but an expense. . Not sure how to handle.

Thanks for any help!

[CatinaT1]

Your posting on an old thread, but I think you are saying your fees from your broker are showing as a sale on your 1099-B. Generally a broker will sell a portion of your assets to pay your broker fees. If you did not pay anything out of pocket to your broker that is likely what happened and you would report this sale. Do not delete it.

[rl02]

I have the same issue with GLD, where there are 12 individually listed sales under UNDETERMINED TERM TRANSACTIONS FOR NONCOVERED TAX LOTS on the broker’s 1099-B. In this section, each sale entry shows a quantity of 0 and non-zero proceeds. In addition, these same 12 entries are listed under “Fees and Expenses” at the end of the consolidated 1099 as negative values of type “Gross proceeds investment expense”.

Since this information was auto-imported into TurboTax, the SmartCheck is now requesting a review of these items. But the review is very vague. Each item comes up as “Form 1099-B worksheet (…) - Capital Asset Sales Wksht (1): Cost or Adjusted basis must be entered.” There is no way to know to which specific entry the error is referring. So, questions:

1. If these are considered sales, how do we update each specific one?
2. If these are fees, where do we enter them?

Thanks in advance for any insights!

[JamesG1]

I agree with @CatinaT1 above.  It is likely that the broker sold a portion of your investment assets to pay their broker fees.  Report these sales.

Investment expenses used to be deductible as an itemized deduction subject to the threshold of 2% of adjusted gross income (AGI).  However, this deduction has been suspended by the Tax Cuts and Jobs Act of 2018.  This expense is no longer deductible,

You may be prompted to Review these entries but your broker will likely not be providing additional information.

You have the option of removing these twelve transactions and uploading the IRS form 1099-B which reports these transactions.  In the TurboTax Online version, a PDF of the IRS form 1099-B may be uploaded into the software.

In the TurboTax Desktop version, you may electronically file but must submit a paper copy of the IRS form 1099-B by US Mail to the IRS.

Please advise if information about these options is needed.

@rl02 

[rl02]

Thank you for your reply! That was helpful; I understand I can't deduct these. The other issue I have with the way this is reported is the # of shares is showing as 0 for each of the 12 transactions, and no shares have been removed from my initial holdings. So it's confusing to me how I should consider these transactions as "sales" when I still have 100% of my original shares.

[Mike8]

I read the thread but I am still confused how to report the "SPDR GOLD TRUST" investment expense that shows up in "Undetermined" tax lots with no cost basis.

Did someone figure it out?

Did you leave it as it is documented in the 1099 so with no cost basis and paying taxes on the full proceeds?