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posted Jun 6, 2019 10:14:45 AM

Should deduction for investment account management fees exclude the portion of fee allocable to tax exempt income?

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1 Best answer
Expert Alumni
Jun 6, 2019 10:14:47 AM

Unfortunately, no. Investment management fees relating to tax-exempt income are not deductible.

Per IRS Pub 550:  "You cannot deduct expenses you incur to produce tax-exempt income. Nor can you deduct interest on money you borrow to buy tax-exempt securities or shares in a mutual fund or other regulated investment company that distributes only exempt-interest dividends."

1 Replies
Expert Alumni
Jun 6, 2019 10:14:47 AM

Unfortunately, no. Investment management fees relating to tax-exempt income are not deductible.

Per IRS Pub 550:  "You cannot deduct expenses you incur to produce tax-exempt income. Nor can you deduct interest on money you borrow to buy tax-exempt securities or shares in a mutual fund or other regulated investment company that distributes only exempt-interest dividends."