I had $5,000 profit in numerous in cash Forex trades this year and $200 in commissions (yes, commissions on 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 the commissions from the profit and that's my ordinary income? Or do I have to do something else with the commissions. My Forex trades don't show at all on my 1099.
Commissions on Forex deductible?
Feb 07, 2008
1 Replies
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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