Can I itemize deductions for legal fees for a bad tax exempt investment ? Also, when i do the capital loss, do i include the amount after the legal fees or before?

[jnorci]

A taxable bank note got stolen & only recovered about 1/2 but attorney fees took 35%. Those fees i'm trying to deduct in itemized deductions being it's investment related. 

Also working on the capital loss, i don't know whether to show the loss after or before the legal fees where taken. 

[CarolynM · Accepted solution]

Yes, your legal fees are an itemized deduction and you should report the entire loss

Here is how to enter  the deduction in TurboTax: 

Go to Deductions & Credits

Scroll to Retirement and Investments

Click Other Investment Expenses

These expenses must be more than 2% of your AGI to be deductible, so you may not see a difference in your calculations. 

For more information, see page 8 of IRS publication 529 here: Misc Expenses