Individual investors, family offices, and investor groups often incur advisory, legal, accounting, appraisal, and similar costs in connection with investment activity. Since 2018, individuals have not been able to deduct miscellaneous itemized deductions, such as many investment management expenses. As a workaround, however, some expenses may be considered capital expenditures under Sec. 263 rather than nondeductible Sec. 212 investment expenses. When properly capitalized, those costs can increase tax basis and may reduce future gain, or increase loss, when the related investment is later sold.

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