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

RESOURCES

Keeping you informed and prepared amid the coronavirus crisis

We’re gathering the latest news stories along with relevant columns, tips, podcasts, and videos on this page, along with curated items from our archives to help with uncertainty and disruption.

SPONSORED REPORT

Getting leases in line

ASC Topic 842 is a relatively simple standard that can mean profound changes for organizations with leases. This report examines what makes this standard challenging and describes new ways for CPAs to add value.