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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29654
Experience:  Taxes, Immigration, Labor Relations
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If I pay $5500 in fees to layaway for 90 days, a block of foreign

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If I pay $5500 in fees to layaway for 90 days, a block of foreign currency that I anticipate exchanging for US dollars at a taxable gain, would that fee be classified as a miscellaneous investment expense subject to the 2% of AGI?

Lev :

Hi and welcome to our site!
If these fees are related to the specific purchase transaction - they are considered purchase expenses (capital expenditures) and are added to the basis of the asset you purchase.
If however - fees are not related to any specific transaction - they are considered investment expenses and with other miscellaneous deductions are subject of 2% of AGI floor limit.


These fees are monthly fees related to a certain dollar amount of foreign currency (i.e. $25 per million and the amounts on layaway can change from day-today. The fee is not for specific items but for dollar amounts for a 30-day or 90-day period.

Lev :

If fees may not be specifically related to the purchased asset - they are not added to the basis of that asset.
As these are monthly fees - they are likely related to your investment account and not to any asset that you might purchase or not. In this case - fees are included into other investment expenses - not added to the basis.


OK. Thanks very much for your help. I will use your services in the future. Can I get the 30-day pkg. I have a couple of questions concerning a construction contractor that I may have a couple of questions about next week.

Lev and other Tax Specialists are ready to help you
I am glad to be helpful.
Appreciate your EXCELLENT rating.

So far - the key in determination how to deduct certain expense is the question - if that cost directly related to purchase of any specific asset - if yes - the cost is added to the basis of that asset. If not - most likely that cost is added to other investment expenses.
In some situations - there might be not clear cut and certain costs might be in gray area - but generally - that is the rule.

Unfortunately - experts do not have to your account and I may not advise of service package.
I may forward your request to management.
Or you may contact the customer service directly.

You are welcome back for all your tax issues.