PLR 2005-07021

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L1: PLR 2005-07021PLR 2005-07021
We have long known that investment advisory fees paid by a taxpayer are tax deductible as a Schedule A miscellaneous itemized deduction; even when those fees are paid on behalf of the taxpayer’s IRA account (a regular IRC 408(a) IRA). This new PLR broadens the tax deductibility of investment advisory fees in two directions:
(1)Advisory fees (sometimes called wrap۝ fees) on IRC 408A Roth IRA accounts are also tax deductible as a miscellaneous itemized deduction; even though qualified distributions from a Roth IRA are non-taxable in certain instances; e.g. over age 59 _.
(2)Trading fees paid on securities transactions have traditionally been non-deductible instead being added to the basis of the security purchased and deducted from the sales price of a security when sold. Now, trading fees paid in bulk usually computed as an annual fee and unlinked from specific trade executions are tax deductible as well.
This then presents some tax planning opportunities for taxpayers; e.g. particularly for those taxpayers that already have substantial miscellaneous itemized deductions or otherwise wish to boost (through the equivalent of an indirect contribution) their IRA balances; especially Roth IRA balances.
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2005-03-08 08:29, By: TheBadger, IP: []