Extension of Interim Guidance on Section 67 Limitations on Estates or Trusts

The IRS withdrew previous interim guidance and issued new guidance, specifying which costs incurred by an estate or a non-grantor trust are subject to the 2-percent floor for miscellaneous itemized deductions under section 67(a).  The guidance also calls for the unbundling of fiduciary fees paid to investment advisers.  The new regulations adopt the Supreme Court decision in Knight v. Comm'n, 552 U.S. 181, 128 S. Ct. 782 (2008), holding that fees paid to an investment advisor by a non-grantor trust or estate generally are subject to the 2-percent floor for miscellaneous itemized deductions under section 67(a).  IRS Notice 2010-32 is modified and superseded.

See IRS Notice 2011-37 (May 16, 2011).

Posted by William Alan Nelson II, Associate Editor, Wealth Strategies Journal