Thanks for the feedback. I still dont know how to move on though. Turbo Tax keeps reminding me to review these "Gross proceeds investment expense" items but adding my cost basis or date of purchase does not help. Im stuck on this to file.

KrisD15

When you entered your basis, did you click "I need to adjust my total cost basis" and then selected any codes to go with it?

Is this for gold?

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Moggy

Between my 1 GBTC & 1 ETHE purchases, it generated 117 sale transactions. What I am doing is selecting the summary option. TT imported my "Total Proceeds" so I just have to enter the cost basis and sale category. I only bought 1 time so easy to calculate the cost basis. Enter that and then select the sale category "short term non-covered". I have to do this 117 times though!

Moggy

EDIT to my previous post: the Cost Basis Factor is provided from TD Ameritrate under "Additional Information" on the Consolidated 1099. I had to multilpy this with the Total Cost Basis (Amount purchased + Commission) . I entered this on the "Total Cost basis (sum of all 1e)" line in TT.

TIP: Use an excel sheet!

docgarner

Create an excel spreadsheet like this

Columns:

(1)Asset

(2)Acquisition Date

(3)Cost/share at Acq

(4)GPIE Date

(5)GPIE Amount

(6)Price on GPIE Date

(7)Shares Sold

(8)GPIE Cost Basis

1: The stock symbol

2: The date you acquired some of that stock (must be sufficient to cover the GPIE sale, or else use next date forward); specific date is the first date if using first-in, first-out accounting, change as needed

3: The price/share (cost basis) that corresponds to the date in #2

4 and 5: Date and amount of GPIE sale from your 1099B form

6: Enter this formula: =STOCKHISTORY(A2,D2,D2,0,0,1)

A2 and D2 should refer to the stock symbol and GPIE date for that row and match the column orders I put here

7: Enter this formula: =E2/F2

(GPIE amount / Price on that day)

8: Enter this formula: =G2*C2

(Effective shares sold * Cost basis for all shares in the lot used to sell them)

Fill that spreadsheet with all the GPIE sales from your 1099B; don't worry about the Cost Basis Factor if you use this method; that's only needed if you can't figure this method out.

Take the values from columns 2 and 8 for each GPIE sale, using them to manually edit the "needs review" entries in TurboTax; helps to click "status" twice in the TurboTax table to sort all "needs review" to top.

Voila! Cost basis complete.

kire589

So here I am in 2023 and still am perplexed how this works. It's a nightmare.

So it seems like there isn't going to be a 1099B Tax Form from my Brokerage (sale of proceeds taken each week for mgmt fees for GBTC). Therefore there is no cost basis factor that I can use to calculate the gains/losses for each tax lot. I opened a case with my brokerage and they said there wouldn't be one and sort of alluded to a section in the 2022 GBTC Tax document. It also seems that Wealthfront won't provide a Tax Calculator for this year for GBTC

From the GBTC Tax document:

"Because the Trust paid out only a de minimis amount of BTC for payment of Trust expenses during the year and made no distributions of sale proceeds to its Shareholders, under Treas. Reg. Sec. 1.671- 5(c)(2)(iv)(B) neither the Trust nor brokers are required to report the gross proceeds of Trust sales to Shareholders on Form 1099B. In lieu of Form 1099B, this information is contained in the attached 2022 Gross Proceeds File together with an example illustrating how a Shareholder should calculate gain or loss."

Did anyone else not receive a 1099B with the Undermined tax lot proceeds w/ cost basis factor?

I suppose I technically don't need it if I do all the steps in the form and use the adjusted cost basis of last year.

There are a few questions that still remain in my mind that I am still not 100% clear on:

1.Are these gains/losses tax deductible of the underlying bitcoin in GBTC (used for mgmt fees)? I think I reported these as deductible last year.

2. When you eventually sell the GBTC stock, you're supposed to adjust the cost basis of the tax lot when calculating the capital gains/loss of the stock itself. Use the new cost basis that you calculate every year instead of using the original cost basis when you purchased the stock through your brokerage. Is this correct?

GeorgeM777

Question 1 - No, the management fees you paid in connection with owning the GBTC are akin to miscellaneous investment related expenses, and as a result of the Tax Cut and Jobs Act, are no longer deductible. Miscellaneous investment related expenses include such things as fees for investment advice, IRA custodial fees, and accounting costs necessary to produce or collect taxable income.

Investment interest expenses, such as the interest paid on money borrowed to purchase taxable investments, is deductible but only if, among other things, you itemize your deductions.

Question 2 - Yes. Based on the 2022 Grantor Trust Tax Information, a shareholder in the GBTC needs to compute--by following steps one through six-- the sale of their pro-rata share of Bitcoin to pay trust expenses and also to determine their adjusted cost basis.

@kire589

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Sunny007

I received corrected 1099-B form with GBTC related expenses and 16 comment which says

16 This transaction represents the sale of assets from a Widely Held Fixed Investment Trust (WHFIT). The cost basis allocation factor is the value of the assets sold divided by the total net asset
value of the trust. If you know your cost of the assets sold, use that to determine your gain/loss. Otherwise, determine your cost basis by multiplying your adjusted cost basis by the cost basis
allocation factor. For example, if your adjusted basis is $1,000 and the cost basis allocation factor is 0.005 your cost basis allocated to that sale is $1,000 * 0.005 or $5. If there are subsequent
sales of trust assets, your adjusted cost basis for the next sale is $995. Sales are reported based on when and for how much the trust sold the asset. This may differ both in timing and amount
from what is distributed. There are cases where the proceeds are used to pay expenses and there is no corresponding distribution. For more information refer to regulations section 1.671-5.

When checked. the GBTC tax letter calculation amount matched the amounts under colum "1d- Proceeds &
6- Reported (G)ross or (N)etDate " column.

So the cost basis seems to be No of shares of GBTC held * Cost basis * Cost basis factor'

I am going with this logic for now unless someone gives better approach or explanation.

https://grayscale.com/wp-content/uploads/2023/01/Grayscale-BTC-Annual-Reporting-12.31.22-Final.pdf