1099-misc miscellaneous

[Kurly]

T/P received year end statement from Merrill Lynch. Under Distributions and Charges there is charge to Fees Of $8,843.53. Telecon to Merrill Lynch, the person on the other end said that it pertained to Management Fees. I am assuming it would go on the Itemized Deductions, subject to 2%. Am I correct or am I looking like the break -down of the word Assume.?

Thanks

Kurly

[Burke]

They are advisory fees, investment management fees, or whatever they like to call them. Sche A, 2% deduction.

[ChEAr$]

T/P received year end statement from Merrill Lynch. Under Distributions and Charges there is charge to Fees Of $8,843.53. Telecon to Merrill Lynch, the person on the other end said that it pertained to Management Fees. I am assuming it would go on the Itemized Deductions, subject to 2%. Am I correct or am I looking like the break -down of the word Assume.?

Thanks

Kurly

the fee should be pro rated according to value of assets, taxable securities and non taxables.

Edit note: fees are subject to the 2% floor

[Burke]

I agree with the pro-rating of taxable to tax-exempt, but how do you figure its not subject to the 2%?

[TXEA]

Miscellaneous itemized deduction subject to 2%.

[FEDUKE404]

Allowable miscellaneous deduction with AGI floor

Not subject to the 2%. However the fee should be pro rated according to value of assets, taxable securities and non taxables.

I don't think that dog will hunt. . .

Investment management fees are always subject to the 2% AGI floor. And the initial amount of those fees must first be adjusted by the ratio of taxable/nontaxable income within the account. Most statements I have seen have already made such a ratio adjustment when it is applicable.

One caveat: Most preparers agree the asset-management fees for an IRA account cannot be used in any way as a miscellaneous deduction.

What does intrigue me here is there was apparently a Form 1099-MISC issued? ? ? ? ? Or maybe just a typo? I've seen plenty of brokerage accounts with management fees (usually quarterly) stated on a year-end summary, but I've never seen anything remotely resembling a Form 1099 for such.

FE

[Burke]

On large brokerages' Forms 1099 (see Merrill Lynch, for instance) the management advisory fees are usually on the back page of many detailed pages attached to the primary one which has all the taxable information reported to the IRS. Most of these other pages are labeled "information not reported to the IRS." The whole thing is labeled "Enhanced 1099." They show lots of information the preparers used to have to call them for, like foreign tax info breakdown, tax-exempt state info, etc. and yes, their mgmt fees. I have one I have to pro-rate since the TP has a high rate of tax-exempt to taxable income.

[ChEAr$]

I agree with the pro-rating of taxable to tax-exempt, but how do you figure its not subject to the 2%?

I don't now. correction just made to my post above. And also happy to say I don't do it that way either. I had in mind gambling losses. Maybe those outrageous fees can be so compared. grin