In article <3bff1839-9427-41b9-9fdb-2de34a5463d1[at]p6g2000pre.googlegroups.com> ,
removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:
- quote -


I've seen arguments and not universal agreement on legal fees to
collect social security or social security disability.


Depending on other income and filing status, anywhere from none to
85% of social security income can be subject to tax.
--

ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Apr 4, 5:58*pm, DF2 <replyvia[at]newsgroup_please.com> wrote:
- quote -

Thanks for the pointer. Thomas's article is indeed
interesting. I printed it and the private letter
ruling for future reference. The PLR is useful for
its citations to law alone.

Although the PLR does not explicitly say anything
about the deductibility of advisory fees for IRAs
(and Roth IRAs), it does conclude that the advisory
fees relevant to an IRA (or Roth IRA) that are a
percentage of the value of the assets in the account
and that are paid from funds outside an IRA "will not
be deemed contributions" to the IRA, and they are
"recurring administrative or overhead expenses
incurred in connection with the maintenance of" the
IRA.

The PLR further cites Rev Rul 84-146, 1984-2 C.B. 61,
which holds that trustee's fees with respect to an
IRA "are deductible under section 212 of the Code to
the extent they satistfy the requirements of that
section" (quoting the PLR, not the Rev Rul).

Since the PLR does not discuss deductibility per se,
no mention is made of the need, or not, to prorate
the deductible fees based on "taxable" v. "tax-exempt"
income in the IRA.

But the PLR does cite 26 USC 212 and part of 26 CFR
1.212-1, in particular section 1.212-1(e).

Section 1.212-1(e) does state that "no deduction is
allowable under section 212 for any amount allocable
to the production and collection of one or more
classes of income which are not includible in gross
income".

However, section 1.212-1(a) states that an expense
may be deducted under section 212 if, in part, it
has been paid or incurred during the taxable year
"for the production or collection of income which,
if and when realized, will be required to be included
income for Federal income tax purposes".

And section 1.212-1(b) states that "[t]he term income
for the purpose of section 212 includes not merely
income of the taxable year but also income which the
taxpayer has realized in a prior taxable year or may
realize in subsequent taxable years".

Since generally, distributions from tradition IRAs
are included in gross income (except for the return
of nondeductible contributions), without regard for
the source of income ("taxable" v. "tax-exempt"), I
conclude that the entire advisory fee atributable to
an IRA can be included in the miscellaneous itemized
deduction, subject to the 2% floor.

It should be noted that I am not relying on the PLR
for my conclusion, but on my uneducated understanding
of the law cited by the PLR. (I am, however, relying
on the PLR's summary of the holding of the cited Rev
Rul. I do not have ready access to Rev Ruls.)

Contrary and supportive opinions by knowledgable
participants would be appreciated.

And thanks again, "DF2", for providing valuable
pointers that, together with Frank's pointer to Pub
550, helped me reached my conclusions for the proper
tax treatment of the advisory fees for my taxable and
IRA accounts.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Mar 31, 5:23 am, "Frank S. Duke, Jr." <duk...[at]one.net> wrote:

- quote -

If your broker recommends you to buy or short some muni bonds and sell
them later for a capital gain profit, this advice is tax deductible as
capital gains are fully taxable.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In misc.taxes.moderated, curiousgeorge408[at]hotmail.com wrote:

- quote -

http://www.fairmark.com/rothira/wrap.htm has some info on the topic.
In particular the second bullet point seems to refer to IRAs in
general, even tho the URL and topic tab would seem to imply the page
is about Roths.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Apr 1, 6:32*pm, DF2 <replyvia[at]newsgroup_please.com> wrote:
- quote -

I wish someone knowledgable would address your comment.

I assumed that advisory fees attributable to income
within the IRA are not deductible, even though they
were paid from a taxable account.

On the other hand, if they are deductible, the broker's
statements for the IRA does not break income down by
"taxable" and "tax-exempt". So I don't know how to
prorate the advisory fees attributable to the IRA for
only "taxable" income, per the requirements of Pub 550.

Moreover, I am a little concerned about including IRA
income in the statement that shows the proration,
required to be attached to the tax return according to
Pub 550, because the numbers would not mesh with 1099s
that the IRS received.

Of course, I could turn a blind eye to all of this and
simply prorate the total advisory fees based on the
percentage of taxable v. total income reported on the
1099s. The "error" would only be discovered in full
audit, which is unlikely, I think. (Famous last words!)

But that is baised against me since I try to emphasize
tax-exempt investments in the taxable and non-tax-exempt
investments in the IRA.

I should probably pay for this advice and file an
amended return later, if beneficial. But I would be
interested in any feedback from knowledgable people in
this forum.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In misc.taxes.moderated, curiousgeorge408[at]hotmail.com wrote:

- quote -

My uneducated guess is that if you paid a fee out of non-IRA funds
for advice on how to invest your conventional IRA, that would be
deductible with the 2% threshhold thing. That IRA is not
tax-exempt, but is rather tax-deferred. While I am not sure, I would
be even less sure if that was a Roth IRA we were talking about.

Suppose instead of buying advice, you are paying an annual $50
custodian fee with funds that are not from the IRA.


If you paid that portion of he expense from the IRA, then you could
not.

Now let's hope we get some good follow-on.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Apr 1, 6:26*am, "Frank S. Duke, Jr." <duk...[at]one.net> wrote:
- quote -

While some of your details might be wrong, I think
you were right about the key take-away, namely the
need to prorate the amount of investment advisory
fees applicable to taxable income only.

At least that is how I read Pub 550 (see below).

Also, your citation to Pub 550 answered all of my
other questions, including some waiting to be
posted :-), again if I am reading it correctly.

No other resources have provided this important input.
So I would not say you "screwed up" at all. You were
just mistaken about __some__ details.

I consider the following Pub 550 to be dispositive,
subject to my correct interpretation and application.

Pub 550, "Expenses of Producing Income", pg 35:

"You deduct investment expenses (other than interest
expenses) as miscellaneous itemized deductions on
Schedule A (Form 1040)."

"To be deductible, these expenses must be ordinary
and necessary expenses paid or incurred: [bullet]
To produce or collect income [...]."

"The expenses must be directly related to the income
[...], and the income must be taxable to you."

"You can deduct fees you pay for counsel and advice
about investements that produce taxable income. This
includes amounts you pay for investment advisory
services."

Pub 550, "Nondeductible Expenses", pg 36 et seq:

"You cannot deduct expenses you incur to produce
tax-exempt income."

"If you cannot specifically identify what part of the
expenses is for each type of income, you can divide
the expenses [...]. You must attach a statement to
your return showing how you divided the expenses [...]."

"One accepted method for dividing expenses is to do
it in the same proportion that each type of income
is to the total income."

"If the expenses relate, in part, to capital gains
and losses, include the gains, but not the losses,
in figuring the proportion."

Pub 550, "When to Report Investment Expenses", pg 37:

"If you use the cash method to report income and
expenses, you generally deduct your expenses [...]
in the year you pay them."

Thanks again, Frank, for this valuable pointer. I did
not find this information anywhere else.


[Note to moderators: I hope you do not consider those
excerpts to be excessively long. I did my best to trim
them without altering their meaning out of context. I
think they all relate directly to my questions and to
Frank's responses. I hope you will agree that they are
relevant, informative and educational, subject to any
informed responses to the contrary.]

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

<curiousgeorge408[at]hotmail.com> wrote in message
news:689c326f-5a4f-4c97-83f3-6732197c7465[at]i28g2000prd.googlegroups.com...
- quote -


Well, Taxcut got a simpleton like me through it, so I guess it is clearly
done.
Turbotax sent me a free copy this year; I tried it but didn't like it. On
the other hand, TaxCut doesn't do Accrued Bond Interest properly; they take
a shortcut that is always wrong, but they (apparently) figure the error is
too small to matter. On mine it wasn't and I had to do it all with
overrides. Very clumsy.
(It assumes that accrued interest is proportioned the same as the interest
from that account, which is unlikely to be true except by pure coincidence.)

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

- quote -


I can think of 3 reasons you can't deduct them
1) They don't exceed 2% of your AGI
2) You don't have sufficient income so they make a difference
3) AMT

Which of these would allow you to carry them forward?
Where is this documented?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

in article
5334748f-3e38-4007-9655-59d7b3b420f0...oglegroups.com,
curiousgeorge408[at]hotmail.com at curiousgeorge408[at]hotmail.com wrote on
3/31/09 7:06 PM:

- quote -

and my mind was thinking investment interest, which is a different animal.
Investment interest has lots of options that are not available for fees.

Check out Pub 550 Investment Income and Expenses page 35 and 36
(non-deductible expenses)

Uncompensated advice guaranteed correct or double your money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

in article siegman-0CE1D0.07423831032009[at]news.stanford.edu, AES at
siegman[at]stanford.edu wrote on 3/31/09 12:58 PM:

- quote -

IRAs.
Uncompensated advice guaranteed correct or double your money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Mar 30, 9:23*pm, "Kevin" <ke...[at]rocketmail.com> wrote:
- quote -

I use TurboTax. It does not hint at any of the details
that Frank describes. Are you saying that TaxCut does?

(I realize that your comment was not in response to
Frank.)

After inputing the line 23 deduction with a description,
TT simply subtracts the 2% AGI amount. No prompts or
automatic adjustments for tax-free investment income;
no prompts for IRA fees deducted from the IRA, which I
assume should be excluded from the deduction. (Right?)

If TaxCut makes this more clear than TurboTax, I will
consider TC next year instead of TT. It has always been
a toss-up for me. But the TT user interface has certain
anomalies this year that I find quite annoying.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Mar 31, 5:23*am, "Frank S. Duke, Jr." <duk...[at]one.net> wrote:
- quote -

Wow! Thanks for all the details. I had no idea
it was so complicated. Well, I had my suspicions.
Your posting anticipated many of my planned
follow-up questions.

I do not see any of this in the instructions for
Sched A or in Pub 529. Where is all this explained
for the hapless taxpayer?


- quote -

Did you purposely omit net cap gains?

Suppose the account has only investments that do
not produce interest and non-qual div; they only
produce net cap gains in the tax year (not a net
loss) due to sales. Are you saying that none of
the advisory fees for that account is deductible
on Sched A?


- quote -

How?


- quote -

Does the carry-over feature apply only to the option
to offset capital gains?

(I assume "them" in both exerpts above refers to fees,
not interest and non-qual divs.)


- quote -

And such fees are not deductible on Sched A. Right?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <C5F78382.133B1%dukefs[at]one.net> ,
"Frank S. Duke, Jr." <dukefs[at]one.net> wrote:

- quote -

I know about the one-time directly-paid charitable deductions allowed
from IRAs in recent years.

But are you saying there's a way to pay advisory or other fees relevant
to an IRA but paid to advisors outside of the IRA, using money from the
IRA -- but somehow do this without withdrawing the money from the IRA
and paying income tax on that withdrawal?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

in article 0dbb2a7c-5391-4965-8cd3-153df0fefbe9...oglegroups.com,
curiousgeorge408[at]hotmail.com at curiousgeorge408[at]hotmail.com wrote on
3/30/09 5:03 PM:

- quote -

As you already found out, these fees can be deducted on your schedule A,
subject to a 2% haircut. That assumes they are related to the production of
taxable income. If some of the account contains tax free investments, some
of the fees must be allocated to thos investments and are non-deductible.
You can only deduct the fees to the extent of investment income and that is
often a problem because qualified dividends don't count. You are already
getting a great deal on them. That leaves interest and non-qualified
dividends. You can select an option to offset them against capital gains
but it does not happen automatically. If you can't deduct them this year,
they carry forward into the future.

Some brokers will, on request, give you a special report that allocates the
fees to taxable investment transactions that go on your schedule D. This
allows you to add to the basis or decrease the sales price for stock sales,
a much more useful place to use them.

Finally, fees on an IRA account should be deducted from the IRA and paid
with pre-tax money, the ultimate deduction. This even helps you on state
taxes in most places.

Uncompensated advice guaranteed correct or double your money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Mar 30, 2:39*pm, "Paul Thomas, CPA" <curiousgeorge...[at]hotmail.com> wrote
- quote -

Or admitting what a lazy fool I am ;-).


- quote -

Yes. I just realized that myself. Thanks for the
confirmation.

I had thought the Sched A deduction did not apply
because the only example in the instructions is
"your share of investment expenses of a regulated
investment company".

(What is that, by the way? Just curious.)

But after seeing an expanded list in TurboTax, I
decided to look at IRS Pub 529 (RTFM!). It says
quite clearly "investment fees [...] and other
expenses you paid for managing your investments
that produce taxable income". Klunk!

By the way, does that mean "that produced taxable
income" in the reporting year? Or does it mean
"that is might produce taxable income (in some
years"?

For example, 2008 was a tough year to produce
anything but capital loss. Assuming no net taxable
income from investments, does the Sched A line 23
deduction still apply for 2008?

Thanks again for the quick response and confirmation.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

<curiousgeorge408[at]hotmail.com> wrote in message
news:0dbb2a7c-5391-4965-8cd3-153df0fefbe9[at]d2g2000pra.googlegroups.com...
- quote -

You need to get TaxCut, quickly.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

<curiousgeorge408[at]hotmail.com> wrote
- quote -


Bragging I see.





- quote -



Yes, Schedule A, subject to 2% of AGI.





- quote -



To be deducted as part of your cost basis, the fees have to be related to
each sale or purchase. Since they waived those fees, you are stuck with a
Schedule A deduction.







--
Paul Thomas, CPA
Watkinsville, Georgia

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

I have a "Private Client" account at Schwab. Schwab provides
advice for a fee based on the quarterly balance, but I make the
final decisions. Either I make the trades, or I ask them to make
them for me. Because of the advisory fees, Schwab waives
per-trade commissions/fees.

Can some or all of the advisory fees be "deducted", either as
some kind of itemized deduction, or as commissions/fees
prorated to trades reported on Sched D?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >