Please forward this error screen to sharedip-1071805854. Type or paste a Form 1041 investment advisory fees name into the text box.

In order to assist our AICPA members who prepare fiduciary income tax returns comply with the Supreme Court’s decision in Knight v. Task Force developed this guidance specifically for CPAs. Applying that reading to the investment advisory fees paid by the Rudkin Trust, the Supreme Court found that they were subject to the 2-percent floor on miscellaneous itemized deductions because the Rudkin Trust did not show “. 2-percent floor unless the trustee can show that there is an “. The Supreme Court did not require, or even address, whether trustee fees should be unbundled. The Court agreed with the approach of the Federal and Fourth Circuits in Mellon Bank v.

And those courts have held that trustee fees are fully deductible because they are not commonly incurred by individuals. Practitioners should be aware that the Prop. 67-4 requires the unbundling of trustee fees. However, the proposed regulations are effective only for payments made after the date final regulations are published in the Federal Register. Therefore, unbundling is not required until and unless the final regulations require such treatment.

Whether other costs, such as legal and accounting fees, are subject to the 2-percent floor also depends on the degree to which it “. As the Supreme Court stated, “. Congress’s decision to phrase the pertinent inquiry in terms of a prediction about a hypothetical situation inevitably entails some uncertainty. In some cases it will be easy to decide whether a cost is uncommon to individuals, such as disputes over income and principal. However, most types of fees, such as consulting fees, appraisal fees, family office expenses, will require a high level of judgment and adequate substantiation to claim a full deduction.

Although the Supreme Court’s reading of the statute is fairly straightforward, substantiating a position based on that reading is very subjective and may be difficult in some cases. If a preparer makes a good faith effort to apply the Supreme Court’s interpretation, the preparer may be able to conclude that his or her position has a more likely than not chance of prevailing on the merits. The Supreme Court’s decision is the law of the land until the IRS and Treasury provide further guidance in final regulations. Therefore, tax preparers should read the decision carefully and apply the Supreme Court’s reading of the statute to each client situation as best they can. Task Force can be found on the AICPA website. Opt-in to Include your profile in our searchable national directory.

General content that may or may not be related to planned giving, but is prudent to our audience. 2016 Planned Giving Design Center, LLC. This material cannot be reproduced without the express permission of Planned Giving Design Center, LLC. Please forward this error screen to sharedip-1071805854. Type or paste a DOI name into the text box. In order to assist our AICPA members who prepare fiduciary income tax returns comply with the Supreme Court’s decision in Knight v. Task Force developed this guidance specifically for CPAs.

Applying that reading to the investment advisory fees paid by the Rudkin Trust, the Supreme Court found that they were subject to the 2-percent floor on miscellaneous itemized deductions because the Rudkin Trust did not show “. 2-percent floor unless the trustee can show that there is an “. The Supreme Court did not require, or even address, whether trustee fees should be unbundled. The Court agreed with the approach of the Federal and Fourth Circuits in Mellon Bank v. And those courts have held that trustee fees are fully deductible because they are not commonly incurred by individuals.