IRS Extends Guidance on Trustee Fees


The IRS announced that it is extending interim guidance on the treatment of investment advisory fees and other costs subject to the 2% floor under IRC § 67(a) (Notice 2011-37). Under the notice, nongrantor trusts and estates will not be required to unbundle their fiduciary fees to determine what portion is subject to the 2% threshold for itemized deductions. Instead, taxpayers will be allowed to deduct the full amount of bundled fiduciary fees without regard to the 2% floor.

 

The notice extends treatment that was originally issued in Notice 2008-32, effective for tax years beginning before Jan. 1, 2008. Subsequent notices extended the treatment to years beginning before Jan. 1, 2009, and then Jan. 1, 2010. Notice 2011-37 abandons the approach of extending the treatment one year at a time and extends it to any tax year beginning before the date final regulations under Treas. Reg. § 1.67-4 are published in the Federal Register.

 

The IRS and the Treasury Department intend to conform the regulations to the Supreme Court’s decision in Michael J. Knight, Trustee of William L. Rudkin Testamentary Trust v. Commissioner, 552 U.S. 181 (2008), but so far have not done so.

 

More from the JofA:

 

 Find us on Facebook  |   Follow us on Twitter  |   View JofA videos

SPONSORED REPORT

CPEOs provide peace of mind around payroll services

The creation of these new IRS-certified service providers for small businesses clarifies some issues around traditional professional employer organizations.

QUIZ

News quiz: Senate health care bill in the spotlight

Reports related to the Republican bill to repeal many provisions of the PPACA, other tax issues, and the giant AICPA ENGAGE Conference offered a diverse reading list for June. See how much you know about recent news with this short quiz.