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Posted by removeps-groups@yahoo.com on February 11, 2008, 2:06 pm
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> I had $5,000 profit in numerous in cash Forex trades this year and
> $200 incommissions(yes,commissionson Forex at some brokers, like
> Interactive Brokers exist). I am using ordinary income (and FIFO) for
> '07 rather than M-T-M this year for reasons I won't bore you with.
> (Section 1256 this year, for sure, though.) Anyway, do I simply deduct
> thecommissionsfrom the profit and that's my ordinary income? Or do I
> have to do something else with thecommissions. My Forex trades don't
> show at all on my 1099.
Commissions are not deductible, but instead get added to the cost
basis. Check to see whether the $5000 profit already includes the
effect of commissions (maybe without commissions the profit would have
been $5100), and even interest for holding a position overnight. It's
your job to track the individual transactions, although a good
brokerage firm will have a history of all the year's transactions, and
last year's transactions too. The 1099 from forex.com does not list
the individual transactions, but you can request them to send you a
report of all transactions for the year. If the commissions are not
part of a flat fee then I guess it would be deductible as an
investment expense subject to the 2% of AGI limit (which often makes
it non-deductible), but I think if you have trader status then you are
not subject to the 2% limit, but am not sure and you should read up
about it.
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