I work for a company headquartered in Britain, and they provide an ESPP. The ESPP is managed by a third party, who also provides access to the stock exchange, manages all the paper work etc. The shares are bought and sold on the London stock exchange in GBP.
At the time of the sale, the proceeds are immediately converted to USD and wired to my U.S. bank account; there is no option to leave them at the broker service that manages the ESPP. The broker service adds a 4% or so markup to the FX rate when they do the currency conversion. There is also a 25GBP wire transfer fee.
Question: Can I treat the currency conversion markup as part of the selling cost, and deduct it from the proceeds? Can I treat the wire transfer fee as part of the selling cost and deduct it from the proceeds?
Yes on both accounts. These mandatory charges reduced your net gain on the sale, so they should be deducted from the gross proceeds.
Do you have any citation for this? I cannot find any reference at all in any tax code.
Thanks.