Question

How to Treat Hard To Borrow Fees on your return

Forum|Forum|6 years ago
April 9, 2020
1 reply
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Hello, I Paid 10k Hard to borrow fee to Ameritrade and it shows as miscellaneous fee on 1099, Can i deduct that as expenses on my return or how that would be treated on my return. My CPA says it can't be claimed anywhere.

Thanks for any help

JohnB5677

Brokers charge short sellers “stock borrow fees” or “loan premiums.” Tax research indicates these payments are “fees for the temporary use of property.” Watch out: Many brokers refer to stock borrow fees as “interest expense,” which confuses short sellers.

For tax purposes, stock borrow fees are miscellaneous other deductions for investors on Schedule A line 28, and Section 162 business expenses for traders qualifying for trader tax status (TTS).

Stock borrow fees are not “interest expense” so investors can’t include them in “investment interest expense” deductions.

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