Brokerage firms charge a Re-organization fee when a company is merge/acquired by another. And the ADR fee is charged by the Transfer(?) Agent for the foreign stocks. Both fees relate to specific securities.
Are the Reorg fee and ADR fees an adjustment to the cost basis? or a investment expense? If expenses, are they subject to the 2% limitation?
TIA
The reorg fee is an adjustment to basis applied to the surviving security (that is, increase your cost basis by the reorg fee to lower future capital gain/increase future capital loss).
The ADR fee is attached to a dividend so is an investment expense subject to 2# AGI haircut on Schedule A.
Ira Smilovitz, EA
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