IBIT & FBTC de minimis reporting problems

[frodo2]

Ref: macOS 26.3.1, TurboTax Desktop Deluxe 2025.r23.037

I’m at wits end trying to report IBIT and FBTC trivial de minimus expenses.

No matter what I do, TTax keeps telling review needed. But no ‘errors’ reported.

1. Following various threads, assured all ‘digital asset’ boxes not checked in Forms view for other transactions.
2. Have deleted and started over 8 times wrt IBIT. Same results.

Has anyone out there been able to make this work?

[Mike9241]

These seem to be investment expenses, not deductible for federal purposes by individuals, though some states do allow a deduction. if they're that small, why not just forget about them?

[frodo2]

Correct, trivial expenses. Not deductible of course, but the cost basis technically needs to be adjusted downwards for 2026. It should be so simple to enter these like other grantor trusts (AAAU, IAU, etc).

It's the TTax tooling here that is problematic, not the actual amount. Additional searching suggested the 'nuclear option' (send in filings via snail mail).

WRT "... why not just forget about them?", that has been on my mind as well, but doesn't seem kosher wrt IRS.

OTOH:

The "De Minimis" Reality

For most retail investors, the total proceeds from IBIT expenses are less than $1.00 for the entire year. If your total annual proceeds round to $0, the IRS generally does not require the reporting of these specific transactions.

But again, how can I simply make TTax report the correct, and highly tedious calculations?

[frodo2]

I think I've finally figured this out. The confusion (mine?) was "Asset Is Digital", versus normal ETF. IBIT (and FBTC) de minimis expenses are to be treated simply as ETF sales not reported to the IRS (Form 8949 Box C or F).

From a long winded discussion with Claude, that best clarified the situation:

Because IBIT is an Exchange-Traded Fund (ETF) structured as a grantor trust, your transactions are technically for shares of the trust, not direct sales of the underlying cryptocurrency.

Why the "Digital Asset" box remains unchecked

• Asset Classification: For tax reporting, IBIT is treated as a security or "interest in a trust". While the trust itself sells Bitcoin to pay fees, you are reporting the tax consequences of those sales as they flow through to you as a shareholder.
• IRS Guidance: The IRS "Digital Asset" question on Form 1040 asks if you had a financial interest in any digital asset. However, reporting these specific fee-related sales on Form 8949 using Box C or F (for non-1099-B transactions) is the standard method for grantor trusts.
• TurboTax Behavior: TurboTax Desktop defaults to standard capital asset fields for these entries. Since you are entering this under the "Stocks, Bonds, Mutual Funds" section, it correctly treats the transaction as a sale of a capital asset rather than a direct crypto-to-fiat exchange.

How to verify your entry is accurate

1. Check Form 8949: Switch to Forms Mode (View > Forms) and open Form 8949.
2. Verify the Box: Ensure your IBIT entries are listed in Part I with Box C checked (for short-term) or Part II with Box F checked (for long-term).
3. Description: The description should clearly state "IBIT" or "iShares Bitcoin Trust".
4. Reporting "Yes" on Form 1040: Even though the individual sale isn't marked as "digital," you must still answer "Yes" to the digital asset question on the front of your Form 1040 if you disposed of an ETF that held digital assets.