Are stock trading fees a tax deduction?

Question

Or deductible from AGI in any sort of way?

Answer 1

The cost of each trade (both ways commissions) are added to your cost basis and thereby reduce your taxable gain.

Example: Buy 100 IBM at 20 + $10 commission = $2010 out of pocket. Sell 100 IBM at 25 + $10 commission = net cash to you of $2490. Your gain is the $2490 - 2010 = $480,

The gain is NOT $5 * 100 or $500.

The WealthBuilder
Tax Specialist

Answer 2

I assume you are not a professional stock trader.

Buy/sell commissions are best handled for each transaction on the Schedule D.

Add cost of purchase to the purchase price, and subtract the cost of the sale from the sales price. The 1099-B will indicate "Gross Proceeds less commission and option premiums" in Box 2 of the 1099.

Alternately, you may add the buy and sell expenses to the original buy price and leave the sell price alone. You might want to do this if Box 2 of the 1099-B indicates "Gross Proceeds" on the sales price.

Other trading expenses are deducted on Schedule A under "Investment Expenses" on Line 22.

Answer 3

On each pertaining stock trade the fees related thereto reduce any gain by increasing the basis of the stock.

Answer 4

Not unless you are trader by profession. For everyone else they are simply part of the cost basis of the investment.