Investment expenses on your Fidelity proceeds are handled two different ways, and only one of them reduces your taxable gain. Costs tied directly to a buy or sell, like commissions and mutual fund loads, are already folded into the cost basis Fidelity reports on your 1099-B, so they lower your gain automatically. Standalone costs like advisory fees, custodial fees, and investment research subscriptions are reported separately on your consolidated statement and are no longer deductible on your federal return.
Transaction Costs Are Already Built Into Your Proceeds
When Fidelity calculates the numbers on your 1099-B, commissions and similar transaction charges never appear as a separate deductible line. They’re absorbed into cost basis instead. A commission you paid to buy shares is added to what you paid; a commission on the sale side reduces what you received. The IRS then compares proceeds to adjusted basis, so the money that went to transaction costs is never treated as taxable gain.
A simple example: buy 100 shares at $50 with a $10 commission and your cost basis is $5,010, not $5,000. Sell those shares later and Fidelity measures your gain against the $5,010 figure. Mutual fund front-end load fees and state or local transfer taxes on stock ownership work the same way. All of them become part of basis rather than a separate deduction.1Fidelity. Capital Gains and Cost Basis
Fidelity performs this math automatically for securities it’s required to track. Under federal law, brokers must report adjusted cost basis on covered securities and identify each gain or loss as short-term or long-term.2Office of the Law Revision Counsel. 26 USC 6045 – Returns of Brokers The figure in box 1e of your 1099-B already reflects those transaction costs.3Internal Revenue Service. Instructions for Form 1099-B You don’t add commissions again on top; doing so would double-count.
The practical takeaway is that “deducting” commissions from proceeds isn’t something you do on your return. It’s something that already happened before the 1099-B was printed.
Advisory Fees and Other Non-Transaction Expenses
The other bucket of investment expenses looks different. These are costs that aren’t attached to a specific trade: investment advisory fees, custodial account fees, subscriptions to financial research, and tax preparation costs related to investments. Fidelity reports the total advisory and management fees you paid during the year in a separate section of your consolidated statement, not on the 1099-B.
Before 2018, these expenses were deductible as miscellaneous itemized deductions to the extent they exceeded 2% of your adjusted gross income.4Office of the Law Revision Counsel. 26 US Code 67 – 2-Percent Floor on Miscellaneous Itemized Deductions The Tax Cuts and Jobs Act eliminated that deduction starting in 2018, and many taxpayers expected it to come back after 2025. It won’t. The One Big Beautiful Bill Act of 2025 made the elimination permanent.5Tax Policy Center. 6Fidelity. Understanding Your 1099 Tax Form
The disallowed loss isn’t lost permanently. It gets added to the cost basis of the replacement shares, which means you get the benefit when you eventually sell those shares. But it’s not something you deduct in the current year, and it’s not an “expense” in the ordinary sense. It’s a timing adjustment.
Fidelity only tracks wash sales within one account. Selling at a loss in your taxable brokerage and rebuying inside your IRA within 30 days is still a wash sale under IRS rules, but Fidelity won’t catch it. You’d need to make that adjustment yourself.
Checking That the Basis Is Right
Because commissions and other transaction costs are supposed to be built into the basis Fidelity reports, an accurate 1099-B does the deduction work for you. The place this can go wrong is with positions where Fidelity’s records are incomplete.
Federal law only required brokers to start tracking cost basis on certain dates: 2011 for stocks and ETFs, 2012 for mutual funds and DRIP shares, 2014 for simpler bonds and options, and 2016 for complex debt and options. Anything acquired before those dates is “noncovered,” and Fidelity may leave box 1e blank or show an estimate it never sent to the IRS. For those positions, you’re responsible for figuring out the correct basis, including any commissions you paid at purchase, from your own records.
Positions that were transferred in from another broker, held for decades, or accumulated through years of dividend reinvestment are the ones most likely to have gaps. So are positions that went through stock splits, spin-offs, mergers, or liquidations, all of which change basis in ways Fidelity’s system may or may not have captured correctly.7Fidelity Investments. Cost Basis Help If the number in box 1e looks off, use your own figure on Form 8949 and keep documentation. The IRS holds you responsible for the accuracy of the return regardless of what the broker reported.
Where the Numbers Land on Your Return
The proceeds and adjusted basis from your 1099-B flow to Form 8949 and then to Schedule D of your Form 1040.8Internal Revenue Service. Instructions for Form 8949 If every sale on your 1099-B has basis reported to the IRS and needs no adjustment, you may be able to skip Form 8949 and report totals directly on Schedule D. Wash sale adjustments or corrected basis figures usually mean you’ll still need the full form.
Advisory fees and other non-transaction investment expenses don’t flow anywhere on the federal return. They stay on Fidelity’s statement as information only, useful for a state return if your state still permits the deduction and for your own records.
A Note on Timing
The IRS deadline for brokers to deliver initial 1099 statements is February 15, and Fidelity can file for an extension of up to 30 additional days.9Fidelity. What Is a 1099 Corrected 1099s can arrive later still if a fund company or issuer sends Fidelity updated information after the initial mailing. Since a corrected form can change the basis figures the whole deduction question turns on, waiting a bit before filing is often safer than filing the moment your first 1099 posts.