I posted this question on the other board, but did not receive an answer. My client told me he paid about $6000 to a brokerage house to manage his account in which he received taxable interest, dividends, and capital gains. He also paid over $1000 for an IRA account to be managed- separately billed. On the statements he has at home the fees were listed as “gross” and “net” – two different amounts. Can anyone help me with the definition of these terms as they apply to management charges? Which one can I deduct on Schedule A? Thanks for any input. Reference: Taxbook 4-26.
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Not enough information to know how to answer your question. The amount actually paid is what is deductible on Schedule A as a miscellaneous itemized deduction, subject to the 2% AGI limitation.
The terms “gross” and “net” could refer to a number of things. The question you need to answer is what amount was actually paid. Gross implies the total fee charged. Net implies something was netted against the gross fee to arrive at something less. That something which reduced the gross fee to the net amount is what you need to find out.
Ask your client to explain. -
Thank you
I did ask the client to get the exact amount to deduct on Schedule A, but he seemed to think I should know what those terms meant and arrive at the figure myself. Now I feel vindicated. I thank you for you help.Comment
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